Understanding the basics of NFL Free Agency

The actual NFL season may be played from September-February, but the reality is the league has manufactured a way to keep itself in the headlines, year-round.

A big part of that is free agency, which begins in mid-March. It centers around the start of the new league year and things don't just hit the ground running - it's a straight-up track meet.

There are a lot of strategies. mechanisms, and terms to know when it comes to achieving just a basic understanding, so we figured it'd be a good idea to put together a hand guide, so to speak, that helps people sift through the layers that comprise NFL free agency.

What is a free agent and how many types of free agents are there?

A free agent is a player that is coming off the final year of their contract. So, if a player's contract ended after the 2023 season, they are currently an impeding free agent. If they are not hit with the franchise tag -something we'll discuss later- by a certain date, most of them will "hit the market" in hopes of either re-signing with their previous team or finding a new home, elsewhere.

There are three different types of free agents:

• Unrestricted free agent - These are players with at least four accrued seasons under their belt. An accrued season is a season in which a player is on a team's 53-man roster for at least six games. If they are on IR, a healthy scratch, PUP, etc. for at least six games - that counts as an accrued season. Practice squad players do not qualify for accrued seasons. UFAs can freely negotiate with any team and they have zero restrictions when it comes to staying in town or finding a new team.
• Restricted free agent - This is the second tier. RFAs are players with three accrued seasons and they are allowed to negotiate with other teams, but their te m has the right of first refusal and can set the tone when it comes to negations via tenders. There are five different types of tenders teams can use when it comes to RFAs.
• First-round tender: Over The Cap projects the 2024 first-round tender to be worth $6.464 million in 2024. If a team places a first-round tender on a player, then he will be paid the above amount or 110% of his previous year's salary - whichever is greater. If a different team gives said player an offer sheet that the original team doesn't want to match, then he will get picked up by the new team and the original team will receive a first-round pick in exchange for him.
• Second-round tender: This is projected to be worth $4.633 million in 2024 and matches the same guidelines as above, except with second-round compensation. There's also the "Upgraded Tender" - if a player is drafted in the third round or lower and a team places a second-round tender on them, then said team will only receive a third-round pick for any other player slapped with a second-round tender.
• Original-round tender: OTC doesn't have a projection on this, but it's typically a little more than the Right-of-first-refusal tender. The original team receives compensation equivalent to that of the round the player was drafted in. So, if a player was drafted in the fifth round and they are signed away, the previous team receives a fifth-rounder.
• Right-of-first-refusal tender: This is projected to be worth $2.828 million in 2024. Mostly a mechanism that helps teams keep valued RFAs, there is no draft compensation that comes with this if a player is signed away.
• Upgraded Tender: As mentioned above, this is a mechanism that keeps teams from receiving too much value in return for a player. If a player is drafted in the second round or lower and a team uses a first-round tender on him, then any other player tendered with a first-round tender, thereafter, will only bring in a second-round pick as compensation. And so on and so forth with the other applicable rounds/tenders.

• Exclusive Rights Free Agent - A player with less than three accrued seasons. If their team offers them a deal based off their credited seasons, then that player is not allowed to negotiate with other teams. If they don't sign the deal, they can't play. Credited seasons are like accrued seasons, except a player only needs to be on an a roster/IR/PUP for three games, instead of six. For example, an ERFA with two credited seasons has to receive a salary equal to the league minimum for two credited seasons, which is a projected $985k in 2024, per Spotrac.

How do NFL contracts work?

There can be multiple components to an NFL contract and some of said parts affect the salary cap in different ways.

• Base salary: It's the amount of money that a player will receive throughout the season. Each player receives 18 game checks (17 games + bye week). There is a minimum base salary, which in 2024 varies from $795k to $1.21 million depending on the experience of the player in the NFL. The entire base salary hits the cap in the current season.
• Roster/option/workout bonuses: These types of bonuses are paid if a player reaches an established checkpoint. For example, being a part of the roster on a certain date or making it to team activities. These bonuses also count in the current year's salary cap.
• Signing bonus: This is where things get more interesting. This is a bonus paid in the moment of signing a contract, but it doesn't hit the cap entirely in the current season. It's prorated through the life of the contract up to five years. So, for example, if a team gives a player a $30 million signing bonus for a three-year contract, it will be a $10 million cap hit per year. If it's a seven-year deal, it would be a $6 million cap hit in each of the first five years, and nothing from the signing bonus in the last two.

• Void year: Considering the above types of payments to players, teams can maneuver the salary cap adding void years at the end of a shorter deal to spread money through future years. Let's say a player agrees to a one-year, $10 million contract. If the team pays him a $10 million base salary, that will be his cap hit in the current year. However, the team can add up to four void years on top of it — it's fake years, and the contract will void at a predetermined date before the start of the following year. With that, the team can just pay the player a minimum base salary ($1.21 million for players with seven or more accrued seasons in the NFL) and the remaining contract in form of a signing bonus (in this example, $8.79 million). This amount would be spread through five years, reducing the player's cap hit to $2.968 million ($1.21 million base + $1.758 million from the signing bonus proration).
• Dead money: The problem with void years is that the money doesn't simply go away. It will hit the cap eventually. In the example above, the player would be a free agent after one season, and the team would have a $7.032 million cap hit. The concept of dead money is a value that hits the cap when the player is not on the roster anymore. That can be money already paid that hasn't hit the cap yet (previously paid signing bonus) or from guaranteed money yet to be paid (like a future guaranteed base salary). The latter can be moved to a new team if the player is traded, but the former is going to hit the cap no matter what.

What are the franchise/transition tags and how are they used?

A team can use one of the two variations of the franchise tag, or transition tag, on any impending restricted or unrestricted free agent. Teams can only use one tag per season and it must be applied from 22 days before the start of the new league year until the eighth day preceding the new league year. So, the 2024 window will be February 20 - March 5.

As mentioned above, there are three total types of tags:

• Non-exclusive franchise tag: The most commonly used tag, this allows players to negotiate with other teams after being tagged. The salary is a one-year deal that's either comprised of a formula based off previous salaries at the same position, as well as previous and current salary cap figures, or, the equivalent of 120% of the player's previous year salary - whichever is greater. If a pursuing team gives this player an offer sheet, the current team has five days to match the offer sheet or the player heads to his new home. If the latter happens, then the acquiring team hands over two first-round draft picks, in exchange.

• Exclusive franchise tag: This tag is rarely used and it does not allow players to negotiate with other teams. It essentially locks them into a one-year deal that's either comprised of a formula based off the average of the top-5 previous year salaries at their position at the end of the restricted free agent signing period, or, the amount of the non-exclusive franchise tag - whichever is greater.

• Transition tag: This tag isn't used very often, either. The cheapest of the three, the transition tag is a one-year deal that is either comprised of the average of the top-10 salaries at a player's position from the previous year, or, 120% of said player's own previous year salary - whichever is greater. Teams do hold right of first refusal in this instance, like the non-exclusive tag, except there is no draft compensation if a team lets a player walk. Teams also have five days to match an offer sheet, like the non-exclusive tag.

You can check out the projected amounts for each tag in 2024, here.

There's a lot more involved and things can get pretty complicated when uncovering/learning all the information that comes with player contracts and whatnot. The above information is a great starting point that not only helps people understand what's going on, it can serve as a springboard for those who are wanting to dive in and get an even deeper understanding of how NFL free agency works.