A Quantitative Analysis of the Use and Efficacy of the Franchise Tag in the National Football League

Open Access
Author:
Ringel, Benjamin Harry
Area of Honors:
Economics
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Edward Coulson, Thesis Supervisor
  • David Shapiro, Honors Advisor
Keywords:
  • econometrics
  • treatment regression
  • NFL
  • franchise tag
  • economic analysis
  • sports
  • salary cap
  • STATA
  • probit
Abstract:
This thesis examines the use of the franchise tag in the National Football League (NFL), the effects of its use on player salary, and what factors make its use on a specific player more likely. The franchise tag is a designation that teams in the NFL can apply to a player whose contract is expiring, which binds that player to the team on a guaranteed one-year contract. Use of the franchise tag has become more frequent in recent years, as has the stigma of being designated a team’s franchise player. With recent developments and research regarding concussions and head trauma in the NFL, more players would rather have long-term contracts than run the risk of getting seriously hurt while playing on a one-year deal. A literature review on the subject shows that there has been virtually no research done on the impacts of the franchise tag, and this thesis aims to begin to fill that void. OLS and treatment model regressions are conducted to analyze the effects of the franchise tag on player salary, and probit analysis is used to determine what factors make the tag’s use more likely. Results show that there are some factors not captured by statistics but captured by the treatment regression model which are inherent in players more likely to be tagged. Among positions where multiple players have been given the franchise tag from the years 2005 to 2009, the data shows that the franchise tag has had a mostly negative impact on player salary. Probit analyses also show that better performance and starting more games make a player more likely to be tagged, and that more years of NFL experience make a player less likely to be tagged. The data, however, is not always very significant due to relatively few instances of players actually being given the tag and playing the following season under it during the time period studied.