Free Agency

A legal status that allows a professional athlete to negotiate an employment contract with the team of his or her choosing instead of being confined to one team. Athletes may become free agents after they have served a specific amount of time under contract with a team.

Free agency allows athletes who are at the peak of their careers to shop themselves out to teams that are willing to pay top dollar and offer the most comprehensive benefits and perks. In 1975, professional BASEBALL was the first major sport to adopt a formal free agency policy; football, basketball, and hockey followed. Before free agency existed, sports franchises generally held complete control over individual players. Their contracts contained reserve clauses, which specifically bound them to one team. Players who grew unhappy with their team had little leverage; sometimes they might be released from a contract, but their only real hope was that they might be traded to another team.

Star athletes can benefit significantly from free agency. When their contract is up, they may get lucrative offers from rival teams (often multiyear contracts worth millions of dollars). For athletes who are less successful, free agency means that if their contract is not renewed, they may be unable to find a spot on another team. Still, the free agent system has helped athletes across the board because it forced teams to raise salaries for all players, not just free agents.

From a team's point of view, free agency can be problematic because it makes it easier to lose star players; those same players also can demand higher salaries. Teams bid for free agents, who usually sign with the highest bidder. In "restricted" free agency, a player is allowed to become a free agent subject to certain requirements. For example, a team might retain the right of first refusal, meaning that it can retain the player if it chooses to match a rival team's offer. Free agents can be restricted on the basis of years served, or age. In professional hockey, for example, a player may become a free agent after completing four seasons, but they hold restricted status if they are under 31 years of age.

In recent years, the term free agent has been used to describe individuals who work for themselves in a variety of situations—independent contractors, home office workers, and temporary employees, for example. Even in-house employees whose skills are so specialized that they are especially attractive to other companies have been called free agents. Strictly speaking, these people are not true free agents. Independent contractors, like free agents, are allowed to sign on with any client or customer of their choosing. Usually, however, they are not contractually bound to any one client the way professional athletes are. A freelance writer, for example, may contract with several clients at the same time. While some clients might ask the writer to sign a promise not to divulge proprietary information, in most cases the writer is not actually prohibited from working with specific companies. Temporary workers have slightly more in common with free agents. They contract with an employment agency, and they are restricted from accepting job offers from the agency's client companies. Usually, however, temporary workers are allowed to sign up with more than one agency.