In the European Union, the 1995 Bosman ruling by the European Court of Justice established this right for association football players in all EU member nations. The Bosman ruling has since been extended to cover other professional sports and players from Eastern Europe. Players were still tied to their clubs unless their contract ran out until the Webster ruling allowed players the opportunity to move between nations, though it does not free footballers to move within the national league in which they currently play. The term came into wide use in North America after sports leagues stopped using a "reserve clause", which provided a repetitive option for the club to renew the contract for one or more years but did not allow the player to terminate it.
- Unrestricted free agent
Unrestricted free agents 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 a 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.
- Restricted free agent
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, if the original team decides not to match the other team's offer for the restricted free agent, the new team provides some number of draft selections to the original team as compensation for losing the player.
- Undrafted free agent
Players who are not drafted in a league's annual draft of amateur players are considered to be unrestricted free agents and are free to sign contracts with any team.
In professional association football, a free agent is a player that has been released by a professional association football club and now is no longer affiliated with any club, but has not finished his or her professional career.
Free agents do not have to be signed during the normal transfer window that is implemented in some countries' leagues. If they are signed by a team, the team signing them does not have to pay any fees - sometimes this is known as "snapped up on a free transfer".
If a player gets released from their club when the transfer window is closed, they cannot sign for another team until the window reopens. A notable case of this being Sol Campbell who in September 2009 was released from Notts County, just after a month from signing on a free transfer. He signed for his former club Arsenal in January 2010, after spending a few months training with the team to maintain his fitness.
National Football League usage
- Restricted free agents
Restricted free agents (RFAs) are players who have three or more accrued seasons of service and whose contracts have expired. RFAs have received qualifying offers from their old clubs and are free to negotiate with any club until a deadline which occurs approximately a week prior to the NFL Draft (for 2010 the deadline was April 15), 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.
- Unrestricted free agents
Unrestricted free agents are players who have completed six or more accrued seasons of service and whose contracts have expired. They are free to sign with any franchise.
- Undrafted free agents
Undrafted free agents are players eligible for the NFL Draft but who are not selected; they can negotiate and sign with any team.
- "Plan B" free agency
Plan B free agency was a type of free agency that became active in the National Football League in February 1989. Plan B free agency permitted all teams in the NFL to preserve limited rights of no more than 37 total players a season. If a player was a protected Plan B free agent, he was incapable of signing with another team without providing his old team the first opportunity to sign him again. The rest of the players were left unprotected, liberated to negotiate contracts with the rest of the teams in the league.
Eight players sued the NFL in U.S. federal court, stating that Plan B was an unlawful restraint of trade. In 1992, a jury found that Plan B violated antitrust laws and awarded damages to the players.
Major League Baseball 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%. Unclassified free agents are those remaining in the bottom 60% of players.
Teams that lose a Type A free agent, to whom they have offered arbitration, receive the top draft pick from the team that signs the free agent, plus a supplemental draft pick in the upcoming draft as compensation. Teams losing Type B free agents, to whom they have offered arbitration, receive only a supplemental pick as compensation.
Teams that lose unclassified free agents, or who do not offer arbitration to classified free agents, do not receive any compensation.
National Hockey League usage
In the NHL, between 2005 and 2008, the age of unrestricted free agency declined from 31 to 27. As of 2008, any player who is at least 27 years old or has at least seven years of service as an NHL player, and whose contract has expired, can declare himself an unrestricted free agent. On July 1 of each year the free agency period begins, and unrestricted free agents are free to negotiate and sign contracts with any team. Under the old collective agreement, which expired in 2005, draft picks were awarded as compensation when a team lost an unrestricted free agent; however, under the current CBA teams losing unrestricted free agents do not receive any compensation.
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. Furthermore, some teams which play in large market cities, and hence have a larger revenue stream, would be able to outbid other teams for talented players. Some leagues, such as the National Football League and the National Basketball Association have imposed salary cap rules in order to avert such bidding wars.
In Europe, the wages of the top players have increased dramatically since the Bosman Ruling, although this is partly because of 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 since clubs can wait for players to finish their contracts and become unrestricted.
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 National Hockey League for the balance of that season. However, other leagues (such as the National Basketball Association) 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 unsigned professional players in the lower divisions.
- "Key questions and answers about 2010 NFL free agency". NFL.com. March 2010. http://www.nfl.com/news/story?id=09000d5d816bc9ae&template=with-video-with-comments&confirm=true. Retrieved 26 April 2010.
- By Jon Heyman, SI.com (2008-10-31). "Free agent Mark Teixeira tops the annual Elias player rankings - 2008 MLB Playoffs - SI.com". Sportsillustrated.cnn.com. http://sportsillustrated.cnn.com/2008/baseball/mlb/10/31/elias.rankings/index.html. Retrieved 2010-07-03.
- McCaig, Sam. "The NHL's top 50 unrestricted free agents - NHL - Yahoo! Canada Sports". Ca.sports.yahoo.com. http://ca.sports.yahoo.com/nhl/news?slug=sm-freeagents0616. Retrieved 2010-07-03.