When must a club exercise the 5th year option for a 1st-round draft pick?

The fifth-year option for a first-round draft pick must be exercised at the end of the third season. This provision allows teams to extend their control over a player beyond the standard four-year rookie contract, which is crucial for teams to maintain talent under favorable terms. By making this decision before the end of the third season, teams can assess a player’s development and performance over their initial years in the league, allowing them to make an informed choice on whether to retain the player at a higher salary for that extra year. This mechanism is particularly important for teams looking to build a competitive roster while managing salary cap implications effectively.