Sport has been embedded in American society and has played an integral fragment in American culture going as far back as the 1800’s. Behind all major professional sports today lies the act of collective bargaining. Simply put, collective bargaining in sports is the process in which the owners negotiate terms and conditions with the players of their respective leagues’. A league’s collective bargaining agreement (“CBA”) establishes the detailed framework for the league. A CBA deals with terms and conditions such as: division of league revenue, free agency requirements, team salary caps, restrictions on player mobility, meals allowance, traveling parameters and other general regulations and restrictions of the league. In this article, I will look at how the three major sports leagues, the NBA, MLB, and NFL, specifically deals with the concept of free agency. Free Agency is a process which allows players to move freely from one team to another team upon the expiration of a player’s contract or after a designated amount of time in the league.
The NBA’s free agency kicks off with the NBA’s Moratorium Period, which is a period of time in which players are free to negotiate with teams but is prohibited from actually entering into and signing new contracts with teams until the Moratorium Period is over. The length of the Moratorium Period is 5 days and starts on July 1st and ends on July 6, regardless what day of the week July 6 falls on. Because only verbal offers can be made during this time, bizarre situations can arise as seen with DeAndre Jordan and the Dallas Mavericks in the summer of 2015.
The NBA categorizes free agency in two classifications: Restricted Free Agents and Unrestricted Free Agents. An Unrestricted Free Agent is free at any time beginning on the first day of the Moratorium Period to negotiate and free at any time after the Moratorium Period to enter into a Player Contract with any team.1 In contrast, a Restricted Free Agent is free at any time beginning on the first day of the Moratorium Period to negotiate a Player Contract with his prior team or can sign an offer sheet with any other team. However, if a Restricted Free Agent signs an offer sheet with another team, the player’s original team can still retain him by matching the terms of that offer sheet. The original team is said to have the right of first refusal. For a team to make one of their players a restricted free agent, they must submit a qualifying offer to the player by June 30. This offer must be a one year offer for 125% of the player's previous salary or the player's minimum salary plus $175,000 (whichever is greater). If a player agrees to this offer, he will play under a one-year contract and become an unrestricted free agent the following year. If not, he becomes a restricted free agent. 2
Similar to the NBA, the NFL also categorizes its free agents as either Restricted Free Agents or Unrestricted Free Agents. Any player with four or more Accrued Seasons is deemed an Unrestricted Free Agent and shall be completely free to negotiate and sign with any team. An Accrued Season is defined as any season in which the player is under contract at full pay status for six regular season games. Full pay status includes active and inactive rosters as well as the injured reserve list. If, however an Unrestricted Free Agent fails to sign with a team by July 22 or the first scheduled day of the first NFL training camp, whichever is later, the player’s negotiating rights reverts exclusively to his original team, provided that the original team prior to June 1 had offered the player a one-year player contract of at least 110% of his prior year’s salary. The original team then has until the Tuesday following the 10th week of the regular season to sign him. If player does doe not sign by that date, the player must sit out the season. If however, no tender is offered by June 1, the player can be signed by any club at any time throughout the season. 3
Any player with three Accrued Seasons, but less than four shall become a Restricted Free Agent upon expiration of his last Player Contract. Similar to the NBA, the NFL allows for an original team of a Restricted Free Agent to have rights of First Refusal if certain conditions are met. Unlike the NBA however, the NFL also allows the original team to potentially receive Draft Choice Compensation as well under certain circumstances, which we will also see in the MLB’s CBA later. In order for the original team to receive the rights of First Refusal and/or Draft Choice Compensation, the original club has to tender a Qualifying Offer to the player on or before the first date of the Restricted Free Agent Signing Period. A player’s compensation under a Qualifying Offer is predetermined by the CBA in Article 9 Section 2(b). A player is still free to negotiate with any team through April 19. If the Restricted Free Agent signs an offer sheet with another team, his old team can either match the offer and retain him or decide not to match the offer and may receive draft choice compensation depending on the amount of its qualifying offer. This model differs slightly from the NBA’s and may incentivize the original team from allowing the restricted free agent to sign with another team if they know they can get a draft choice compensation out of it.
Unlike in the NBA or MLB, an NFL club can nonetheless restrict an unrestricted free agent from leaving by applying one of their “tags” to the player. NFL clubs have three options when it comes to “tagging” a player: 1) Non-exclusive franchise tag, 2) Exclusive franchise tag, 3) Transition tag. Non-exclusive franchise tag is a one-year tender offer to a player for an amount no less than the average of the top five salaries at the player's position over the last five years, or 120 percent of the player's previous salary, whichever is greater. The player can negotiate with other teams. The player's current team has the right to match any offer, or receive two first-round picks as compensation. As the name suggests, an exclusive franchise tag gives the player’s team exclusive rights. However, this added luxury comes at a higher cost to the team. A player being tagged with an exclusive franchise tag can receive no less than the average of the top five salaries at the player’s position for the current year (not the last five), or 120 percent of the player’s previous salary.
Lastly, the transition designation is a one-year tender offer to a player for an amount that is the average of the top 10 salaries at the positon, as opposed to top five. Under the transition tag, the original club still has the right of first refusal to match any offer the player might receive from another team, but no compensation is received if the original team decides not to match such an offer. Each team can only use one of the three tags in a given year and a player can only be tagged three times by his team, with a bump in pay each time.4 Franchise tags were clearly created to restrict mobility of a club’s top player from moving to a bigger market. The power to prohibit an unrestricted free agent from signing with another team is unique to the NFL, in comparison with the NBA and the MLB.
In the MLB, any player with six or more years of service and who has not executed a contract for the next succeeding season shall become a free agent. Eligible free agents become free agents the morning after the last world series game is played. A “quiet period” of 5 days follows, during which only the player’s most recent team is able to negotiate terms or contract with him. This is similar to the NBA’s moratorium period in that the player is prohibited from signing a contract with other teams, but is dissimilar in that the MLB allows the player to sign a contract with his recent team. This allows the players recent team to be able to lock the player in a contract before anyone else in the league has a chance to offer him a deal. By the end of the quiet period, the team must decide whether to tender the player a “qualifying offer”, which under the most recent CBA is a guaranteed one-year contract equal to the average salary of the 125 highest paid players from the previous season.5
If a player is offered a “qualifying offer”, the player has seven days to accept or reject the offer. If the player rejects the offer and signs with another team, the original team may be able to receive compensation only if the player was continuously under reserve, without interruption, to the same team since Opening Day of the previous season (Qualified Free Agent). Additionally, a Qualified Free Agent who signs a Minor League contract shall not be subject to compensation regardless of whether the Minor League contract is subsequently assigned to the Major League Club. The former club subject to compensation shall receive an amateur draft choice in the following Rule 4 draft. The actual pick is determined by a multitude of factors expressly stated in the CBA. Conversely, the signing club of a Qualified Free Agent on the other hand shall forfeit its highest available selection in the next Rule 4 draft. However, a club would not be required to forfeit a selection in the top ten of the first round. If that’s the case, the clubs next highest available selection shall be deemed its first selection for purposes of compensation.
As evident by this article, the basic concepts of free agency are utilized and applied by all three leagues with some form of similarities and differences between them. Both the NBA and the MLB distinguishes free agents between unrestricted and restricted. The MLB does not explicitly use the terms unrestricted and restricted, but the free agency is still very similar to the other leagues. Both the NFL and the MLB incorporated a compensation rule in their respective CBA’s allowing a team that loses a restrictive free agent or qualified free agent to be compensated when that player refuses an offer by his former team and signs with another team. Though the NBA does not have a compensation rule, it does provide for a restricted free agent’s former team the right of first refusal in negotiating with a player and the ability to sign a player for more than any other team in the league can offer, which is the Bird Rule and not discussed in this article. Although mobility of free agents, even unrestricted free agents, can be restricted by their respective clubs, free agency at its truest form allows athletes to shop themselves out to other teams who are willing to pay top dollar for their services. Free Agency has been and will continue to be a contested issue in collective bargaining agreements.