In professional sports, a free agent is a player, whose contract with a team has expired, who's eligible to sign with another franchise. 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.
Restricted and unrestricted free agency[edit | edit source]
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 the NHL Entry 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[edit | edit source]
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[edit | edit source]
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.
Deadlines[edit | edit source]
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 National Basketball Association) have no such restrictions.