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Free agent
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In professional sports, a free agent is a team player whose contract with a team has expired, and the player is able to sign a contract with another team if that player is chosen. The term came into wide use in North America after sports leagues stopped using a "reserve clause" after much acrimonious collective bargaining, which provided a repetitive option for the club to renew the contract for one more year, but did not allow the player to terminate the relationship with the team.
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Encyclopedia
In professional sports, a free agent is a team player whose contract with a team has expired, and the player is able to sign a contract with another team if that player is chosen. The term came into wide use in North America after sports leagues stopped using a "reserve clause" after much acrimonious collective bargaining, which provided a repetitive option for the club to renew the contract for one more year, but did not allow the player to terminate the relationship with the team. The result of the reserve clause was abusive from the player standpoint so that a player was essentially property of the team. Once in free agency, a player is in a "pool" of free agents, from which teams can sign players who are able to drive hard bargains in the employment market place since the owners now must compete for their talents. The term is also used, with similar meaning, in contexts outside of sports; for example, a well known musician who is no longer under contract with a major label might be described as a free agent.
In Europe some countries such as Spain had a system whereby footballers were entitled to a free transfer at the end of their contract. In most countries however this was not the case until the 1995 Bosman ruling by the European Court of Justice which established this right for players in all EU member nations. This ruling initially only encouraged the transfer of players between clubs and did not have the same effect as the Seitz ruling in American sports. Players were still tied to their clubs unless their contract ran out. The Webster ruling, however, has in theory the same freedom clauses that will allow players the opportunity to move between nations, but will not free footballers to move within the national league they currently play in.
The Bosman ruling has since been extended to cover other professional sports and players from Eastern Europe.
Restricted and unrestricted free agency
Unrestricted free agents (UFAs) are players without a team. They have either been released from their club, had the term of their contract expire without a renewal, or were not chosen in league's draft of amateur players. These players, generally speaking, are free to entertain offers from all other teams and to decide with whom to sign a new contract.
The specific rules of restricted free agency vary among the major professional sports, but in principle, it means that a player is free to solicit offers from other teams for new contracts. However, before this player is allowed to sign with the new club, the current club has a chance to match (or come within 10% in some leagues) the terms of the new contract in which case the player must remain with the original team. In some leagues, when a team signs a restricted free agent, they must compensate the original team with draft picks.
Undrafted Free Agency
Players who are not drafted in a league's annual draft of amateur players are also considered to be unrestricted free agents and are free to sign contracts with any team.
Drawbacks for owners
The economics of free agency are disadvantageous for team owners; it can lead to bidding wars -- and increased player salaries mean decreased owner profits. Restrictions on free agency have therefore been preferred by North American team owners since the abolition of the reserve clause. For example, a draft can be used to keep young and talented players from generating bidding wars, and causing higher player salaries throughout the league.
In Europe, the wages of the top players have increased dramatically since the Bosman Ruling, although this is partly due to increased television revenues. Some club chairmen have called for a payroll cap in a bid to control player wages but this would almost certainly be ruled anti-competitive and therefore illegal under EU law. As in North America, the number of transfers involving a fee are on the decline as clubs can now wait for their targets to see out their contracts and move "on a free".
Deadlines
In some leagues, free agency has deadlines. For example, under the current NHL Collective Bargaining Agreement, restricted free agents who do not sign contracts by December 1 of a given year will be ineligible to play in the NHL for the balance of that season. However, other leagues (such as the NBA) have no such restrictions.
In Europe, players can only move during transfer windows - during the close season and half-way through the league season. There are exceptions for unattached (i.e., unemployed) professional players in the lower divisions.
NFL Usage
Unrestricted Free Agents
Unrestricted Free Agents (UFA) are players who have completed four or more accrued seasons of service and whose contracts have expired. They are free to sign with any club.
Restricted Free Agents
Restricted Free Agents (RFA) are players who have completed three accrued seasons of service and whose contracts have expired. They have received qualifying offers from their old clubs and are free to negotiate with any club until April 21, at which time their rights revert to their original club. If a player accepts an offer from a new club, the old club will have the right to match the offer and retain the player. If the old club elects not to match the offer, it may receive draft-choice compensation depending on the level of the qualifying offer made to the player.
Exclusive-Rights Free Agents
Exclusive-Rights Free Agents (ERFAs) are players who have completed between 0-2 accrued seasons of service whose contracts have expired. If tendered, they have no negotiating rights with other clubs and must sign their tender with their old club or sit out the season.
MLB Usage
In Major League baseball, free agents are classified as either type A, type B, or unclassified. Type A free agents are those determined by the Elias Sports Bureau to be in the top 20% of all players based on the previous two seasons. Type B free agents are those in the next 20 percent. Unclassified free agents are those in the bottom 60%. Teams that lose a type A free agent receive the top draft pick of the team that signs their free agent and a supplemental draft pick in the upcoming draft as compensation. Teams that lose type B free agents receive only a supplemental pick as compensation. Teams that lose unclassified free agents do not receive compensation.
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