During the last 12 months, NBA free agency has been among the biggest stories in professional sports.  Leading up to the summer of 2010, speculation swirled as to where LeBron James, Dwyane Wade, Chris Bosh, Amare Stoudemire, Carlos Boozer, Joe Johnson, and Dirk Nowitzki might land. In the now-infamous “The Decision” of July 8, 2010, LeBron revealed that he would be teaming up in Miami with Wade and Bosh. Diehard NBA fans and those just tuning in for a dose of pop culture witnessed NBA history as three All-Star free agents in their playing primes descended upon a single franchise, willingly taking less than a maximum salary in order to do so.

Seeing their colleagues flex their rights in free agency clearly rubbed off on other superstars. A mere two days after “The Decision” came down, Chris Paul reportedly professed his desire to form a big three of his own alongside Carmelo Anthony and Amare Stoudemire in New York. Now that the prophecy has been two-thirds realized, a second superteam of in-their-prime superstars may be well underway.

Today’s NBA is comprised of an all-time high 30 teams. Twenty-five players were named to the All-Star teams this year, but they came from only sixteen NBA teams. If the proposed Knicks superteam were to form, then the 25 players would come from only 14 teams. So, while a handful of teams would boast many All-Stars, the majority of teams would have none. In a league driven by superstars, small-market owners and fanbases shudder at the thought of a superteam trend. While exceptions exist (e.g. Tim Duncan and Kevin Durant), one can only wonder if other superstars won’t develop an “if you can’t beat’ em, join ‘em” mentality once superteams start racking up championship hardware. Neither Duncan nor Durant knows what it’s like to play in a league dominated by superteams… But they may know soon.

The superteam trend begs a threshold question, especially as collective bargaining approaches: Are superteams good for the game?

As in the case of the MLB’s New York Yankees and Boston Red Sox, superteams are great for provoking strong emotions in those that follow them and those that love to hate them. Also, if clearly dominant teams exist in each conference, there will be a better chance of a clash of superteams in the Finals, which, as evidenced by recent Lakers-Celtics Finals matchups, makes for great drama and great ratings come season’s end. But what are the costs? Parity takes a big hit. More teams’ fanbases are guaranteed to have no shot at contending year in and year out.

Aside from maybe Knicks fans, few fanbases come out in large numbers to see serially uncompetitive teams. And when many teams become serially uncompetitive, teams lose money, the potential for lockout grows, and there comes talk of contraction.

In response to the superteam phenomenon, and seizing upon the impending expiration of the CBA, there has been growing chatter of the NBA implementing franchise tags, as the NFL first did in 1993. In this article, we will explore the concept of a franchise tag as it is presently used in the NFL, discuss the pros and cons of franchise tags as applied to many of the NBA’s key stakeholders, and take a stance as to whether any type of franchise tag has a place in today’s NBA.

NFL teams have two versions of franchise tags at their disposal but are able to offer only one version to one player per year. The first type of tag designates a player as the team’s exclusive franchise player. That player is automatically retained by the team for the following season under a guaranteed contract valued at the greatest of 120 percent of his prior season’s salary or the average of the top five salaries at the player’s position.

Effectively, in exchange for forcing the player to remain with a particular team, he is handsomely rewarded with a very high and entirely guaranteed salary (unlike the NBA, salaries are generally not guaranteed in the NFL). A player can be given this type of tag for up to three consecutive years, and the player’s salary increases substantially every time he is tagged.

The second type of franchise tag designates a player as the team’s non-exclusive franchise player. Under this tag, other teams may pursue the player, but the tagging team retains the right to match any offer sheet signed by the tagged player, thus enabling the team to keep the player for years into the future. If the team elects not to match, it is rewarded with two first-round picks as compensation (the average first-round pick in the NFL is typically more highly valued than the average first-round pick in the NBA).

Without delving further into the intricacies of the NFL’s franchise tag system, we’ll explore how a similar system in the NBA might positively and negatively affect key stakeholders:

The small(er) market team: Small and smaller market teams such as Cleveland, Utah and Phoenix have been losing to bigger market teams like New York, Miami and Chicago in the recruiting of superstar free agents. Seeing the demise of Cleveland and Toronto in the wake of LeBron James and Chris Bosh’s respective departures, small(er) market teams would likely jump at the chance to offer their superstars a set of one-year deals in order to retain franchise competitiveness and respectability.

Not only would the teams remain competitive on the court and at the box office for longer periods of time, they would also have the luxury of offering repeated one-year deals, thus forcing the player to bear the risk of a career-threatening injury or an otherwise significant drop-off in play. Faced with the choice between a mandatory one-year deal or a voluntary, longer-term deal to remain with the same team, the player might be pushed into remaining with his team despite his true desire to leave.

Also, franchise tags might save smaller market teams from committing themselves to long-term deals for non-transcendent stars. Take Washington and Gilbert Arenas, for example. He was only once an All-NBA 2nd Team player, and he never made an All-NBA 1st Team. He had a history of behavioral issues dating back to Golden State, and he’s an undersized two-guard (or an unnatural point guard). But Arenas was coming off three consecutive All-Star Game appearances when Washington signed him in the summer of 2008 to a six-year, $111 million contract.

If Washington had a franchise tag, they would have had the option to tag Arenas in 2008-09 and possibly again in 2009-10. In doing so, the team would ensure the player’s motivation and good behavior by keeping him in a contract year for multiple years consecutively.

While Washington would pay Arenas more in salary in 2008-09 if they tagged him, they’d have far less overall guaranteed money tied up in a player who could go from borderline superstar to non-starter in a mere 2.5 years (not to mention his year-long suspension). While this particular hindsight is easy, massive maximum deals for players who are anything but transcendent often end up hurting teams.

A franchise tag might also allow smaller market teams the opportunity to prove to their superstar free-agents-to-be that they are committed to making the team competitive. For example, suppose Kevin Durant was not outwardly committed to a future in Oklahoma City and was skeptical of the team’s willingness to add pieces around him that could make the team a viable contender.

If such were the case, then Oklahoma City could place an exclusive franchise tag on Durant in order to buy the time necessary to prove to him that they were serious about making the Thunder a contender.

Another benefit of franchise tags to small market teams (to all teams, actually) is that they allow a team to retain a superstar in the twilight of his prime without committing a long contract to him that would take the team into the wake of his prime. So, knowing that most NBA players peak by their mid-late 20s, a team could tag a 26 year-old superstar for successive years rather than sign him to a contract that would take the team into the player’s early 30s.

While the franchise would be paying the player big money in his late 20s, it could be more assured of the player’s productivity than if it signed the player to a long-term, guaranteed deal. Overall, less guaranteed money would be committed to NBA players at any given time if franchise tags came into being.

A very negative and very real implication of the franchise tag system as it relates to small(er) market teams is the possibility that, by exerting its power over a superstar, the franchise could create a locker room cancer and destroy team chemistry.

A superstar is a great asset to have if he is competitive and committed to team success. If he is disgruntled and bitter about his restricted movement, then he could detrimentally affect those around him.

Even before the first game of the 2010-11 season, the final year of Carmelo Anthony’s contract with Denver, trade speculation swirled. Prior to their first game, the New Jersey Nets were engaged in serious talks for Carmelo, and these talks persisted until Nets’ majority owner Mikhail Prokhorov decided to terminate them, conclusively stating that the “uncertainty has been at the expense of the players, and I’m sure it caused harm to us in some games.” After the Nets ostensibly dropped out of the pursuit of Anthony, the Knicks became the frontrunners for ‘Melo.

During the course of this pursuit, the Knicks (who had a winning record and were playoff bound) went 5-7, and starting point guard Raymond Felton has said that the distraction “really gets on [his] nerves,” conclusively stating: "I'm not talking about [the potential deal for Carmelo Anthony]. That's the problem right now."

In short, a superstar player in the final year of his deal can cause significant disruption to all players and teams rumored in trade talks surrounding the superstar. An exclusive franchise tag allows a player to be in the final year of his contract for several years in a row, potentially resulting in even more distraction and drama.

Mid-market franchises: Teams in mid-sized basketball markets would likely support the franchise tagging system. Under the current system, franchises like Portland or Atlanta are in the position where they must offer max contracts to non-superstars in order to remain competitive. In the last two years, Portland signed Brandon Roy to a five-year maximum salary contract and Atlanta signed Joe Johnson to a six-year maximum salary contract.

Under the present system, Portland and Atlanta felt the need to offer long maximum contracts to these non-transcendent All-Stars in order to remain competitive, reasonably believing that no better free agent would come to their teams in free agency. Under a franchise-tagging system, these teams would have the option to tag these players rather than sign them to long-term, guaranteed deals.

While the players would cost the teams slightly more in the first year, they would not have to commit as much guaranteed money to the players, thus protecting themselves against cap inflexibility in the case of a nagging player injury (e.g. Brandon Roy) or in the case that management decided to rebuild or to build around a different core of players (e.g. Atlanta if the team continues to fail to make the Eastern Conference Finals). At the very least, the franchise tag would provide these types of franchises another tool in their arsenal.

Large-market teams: Large-market teams will certainly oppose the concept of franchise tags. New York would not have been able to sign Amare and Carmelo if Phoenix and Denver slapped them with franchise tags. Miami would not have a “Big Two” let alone a “Big Three” if Cleveland and Toronto slapped tags on LeBron James and Chris Bosh, respectively.

Rather than having Dwyane Wade, Chris Bosh and LeBron James all making under $15 million in 2010-11, the Heat under a franchise tag system would likely have just Wade, and he would cost them over $16 million if he signed an extension as a Bird Free Agent and would likely have cost the Heat even more if he had to be tagged. Under a franchise tag system, the only superteams that would form would be those like the Celtics that aggregated the types of ageing stars for whom no team would pay top salaries.

(You can read Part 2 of the article here).

Matt Tolnick is an agent at Kauffman Sports. The opinions expressed in this article are not to be construed as the opinions of Steve Kauffman or KSMG as an entity. Continue following the blog series at kauffmansports.com or on Twitter @KauffmanSports.