On Free Agency
Reflections on the revolution in player movement.
‘No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…’ – Winston Churchill
The National Draft is the primary means of bringing aspiring players into the AFL system. It’s also a hilarious Rube Goldberg machine – the unwieldy product of the AFL attempting to balance a series of complex, competing demands. Ask any footy nuff these days, and you’re likely to receive the same answer: the draft is “compromised” by father-son selections, Northern Academies, and Free Agency compensation picks.
I’ll leave the first two of those topics for another day. Inspired by Isaac Cumming’s heroic and correct decision to exercise his free agency rights to join the Adelaide Crows, and the torrent of takes – some reasonable, most not – unleashed by the AFL’s decision to award St Kilda with Pick 8 in compensation for losing Josh Battle, I want to ruminate on the free agency system. What is it designed to achieve? What do its critics say? And in what ways does it succeed and/or fail?
The free agency system was born in compromise. The AFL knew it couldn’t continue ignoring calls for greater freedom of movement, but was also wary of constructing a system which handed already-successful sides a massive ongoing advantage. The result is today’s system: after eight or more years of service to their current club, a player becomes a free agent when they come out of contract, and the club they depart is compensated in the form of a pick inserted into the draft, with its exact location determined by the player’s new contract.
So that’s what free agency is. But what is it, really? It’s two things: a shield to protect lowly sides from losing their best players, and a valiant attempt to satisfy two strong forces working in opposition: player movement and equalisation.
I’ll put my cards on the table. I think equalisation is good. In fact, I think it’s the tradition of the game we should work hardest to preserve. The idea that any club can realistically aspire to winning the flag if they make the right decisions – even if that idea is often better honoured in theory than realist – is fundamental to footy. Only one set of supporters gets to celebrate a premiership. The rest of us at least deserve hope. Evenness, or at least the reasonable imitation of it, is integral to the league’s competitive and commercial health. But, on the other hand, it’s the players who make the game. I didn’t have a poster of Andrew Demetriou on my wall as a kid. Why should we impinge their rights to maximise their earnings and seek success over a brief and brutal career?
The realisation that player movement and equalisation are at odds is an uncomfortable one. But, unlike bozos like me, it’s one that AFL administrators actually have to confront. They have to build a player allocation system (and a draw, and a tribunal system, etc.) which enables equality of opportunity without brute-forcing equality of outcome. Most reasonable people acknowledge the difficulty of that balancing act. But not all believe the AFL has found the right balance.
The initial fear is that free agency, by greatly facilitating player movement, would work as a reverse Robin Hood scheme: paying the rich by stealing from the poor. I think these concerns did and continue to have merit. Geelong, Hawthorn and Sydney all understand that leveraging their success and prestige to recruit proven players is a more prudent bet than relying on the primitive science of the draft. They’ve changed their recruitment strategies accordingly (and, correspondingly, players have been more willing to allow their contracts to expire so they can join them). Clubs with bleak near-term prospects, meanwhile, don’t have the same luxury. Instead of signing in-demand free agents – they tend to lose them.
A frequent sidekick of these anti-free agency arguments is the helpful suggestion that clubs which lose players should simply create better environments that encourage player retention. But that’s begging the question. One of the precise reasons that clubs struggle to create those environments is because they are forced to take a step backwards whenever a free agent departs. Pick 8 definitely eases the pain for St Kilda losing Josh Battle. Yes, it’s a higher price than he’d fetch in-contract. And yes, there’s a chance Pick 8 becomes a player who provides the Saints with more value over their career. But losing an above-average player in his peak years will hurt the Saints in the short term, and – very possibly – damage their chances of retaining other valuable players like Mattaes Phillipou and Nasiah Wanganeen-Milera.
Today, however, you’re just as likely to hear an anti-free agency argument from the other side of the debate. Perhaps that’s more of a statement about the club allegiances of AFL journalists, talkback callers and people on Twitter – I’m not sure. These complainants usually argue that free agency compensation is too generous, and that it creates unfair distortions. The most obvious distortion is to the draft itself. Northern academies and father-son selections might have deleterious effects on equalisation and competitive integrity. But they don’t really contribute to the adulteration of the draft because most of them wouldn’t be in the draft pool at all if not for academies. They’re “additive”. And they were never truly available to non-academy clubs anyway. Compensation picks are different. They’re created from thin air when free agents move clubs, and clubs which aren’t party to the deal are pushed back in the draft order.
Closely associated with that first branch of criticism is that the current “secret herbs and spices” compensation formula has a tendency to produce results that seem disproportionate to player quality. When Lance Franklin left Hawthorn to join Sydney as a free agent in 2013, Hawthorn only received Pick 19 in compensation – because they’d just won the Premiership. (They also won the next two.) When Ben McKay decamped from North Melbourne last year, the Roos got Pick 3. Howls of derision followed. And sure – it looks egregious. But I think that fails to grasp what compensation picks actually are. They’re not the AFL’s judgments of relative player quality. They’re judgements of relative team need. North needed assistance, in the form of a high draft pick, more than the Hawks did.
The next criticism of the free agency system as currently constituted is that it creates perverse incentives for clubs. As it stands, sides which suspect they might lose a player to free agency are incentivised to believe that the obscure formula of compensation picks might spit out a superior pick than trading that player under contract.
There’s another criticism of free agency I don’t see as often. Or, rather, I do see it, but rarely do I see it carried out to its logical conclusion. Free agency is inflationary. Eyebrows were raised across Australia, or at least in the parts which care about footy, when it was revealed that Harry Perryman’s contract at Collingwood would trigger Band 1 compensation. The whispers (and they’re all we have to go on, given player salaries aren’t public) is that the Perryman will be paid to the tune of approximately $900,000 per season. Good on him. Of course, this is a little strange. Harry Perryman is not, in any sense, a better player than Nick Daicos. But, until Daicos signs his next contract, he’ll be paid as though he is. We all know why. Clubs pay over the market rate for free agents because they don’t cost any draft capital.
To an extent, this is a problem which will be ameliorated as the salary cap is increased. But it also leads to a direct confrontation with the devil that dares not speak its name: the 95 percent salary cap floor. This is another dilemma I struggle with. AFL players deserve to be paid, and the Players’ Association has done well to negotiate in their interests. But there’s an uncomfortable reality: the cap floor works against equalisation. How? By forcing poorer sides to overpay mediocre players. This has two cascading effects: it makes those players harder to shift, and by leaving less room in the salary cap for other players – including prospective free agents. I don’t believe it makes sense that clubs at the bottom of the ladder are deprived of one of their most valuable bargaining chips – cap space – at a stage in their list build when it should be one of their main competitive advantages. If the floor were removed entirely (not a solution I’m entirely in favour of) or, ideally, relaxed, then it’ll give struggling clubs more money to lure and retain players that truly move the needle.
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People who think that free agency is too generous for the club losing the player generally propose two solutions. The first, and most extreme, is to abolish compensation picks entirely. The club losing the player has received multiple years of service. There’s no reason to expect additional compensation. Hard luck. Survival of the fittest (or richest). In fact, the loss of a player liberates salary cap space that can be used on the acquisition of new players or better terms for existing ones. The more moderate proposal is to water down the compensation. There’s a couple of different forms of this one. Some people suggest that the entire first round of the draft should be quarantined, others just the first 10 picks, etc. Funkier suggestions include things like awarding the club that lost the player cap space equal to the value of the player’s new contract. But these are different forms of the same argument – that the current arrangement is too generous, and early draft picks are too valuable.
I see some merit in the suggestion to water down compensation, perhaps by quarantining the first round of the draft. It’s obviously a source of annoyance for clubs which aren’t involved in a deal to nevertheless be disadvantaged. And Josh Battle probably shouldn’t be netting the Saints a better pick than what he’d yield on the open market! But the full abolition argument goes to a place I really don’t want to follow. In 1995, the Bosman Ruling allowed soccer players within the European Union to move to another club at the end of their contract without the receiving club needing to pay a transfer fee. The ruling was a watershed for labour rights – and an absolute disaster for competitive integrity. Soccer has always been ruled by the rich and powerful. But Bosman hastened their complete and utter conquest of the sport. Preventing that outcome in the AFL means accepting that if we don’t want to impose costs on players by restricting their mobility, then everyone else should learn to live with the modest costs imposed on every club.
Complaining about the status quo ante is fine fodder for talkback radio. But this is One Percenters. We aspire to be better. So what of the proposed solutions? For a start, none are solutions, so much as different trade-offs we must encounter. But I think some of them warrant further thought. What would happen if we quarantined the first 18 picks of the draft to create a “true” first round of the draft – thereby adjusting compensation bands so they only begin at the second round? Well, it would look nicer, that’s for sure. And it would allay the frustrations of clubs whose first picks are pushed back. But it would hurt the clubs who need the compensation most. Perhaps the AFL should publish the compensation formula so all parties to the deal know in advance which band will be triggered by the prospective contract? Perhaps, instead of creating picks out of thin air, the AFL should instead subtract something from the draft hand of the receiving club? But then, aren’t we just back to a world of forced trades, and insufficient player mobility? There is also a rather radical solution I’ve not mentioned here: abolishing the draft entirely, and replacing it with a more efficient player allocation mechanism – an auction. I might game that out in a separate post in future.
I have a lot of sympathy for the AFL here. It’s trying to manage two entirely legitimate but fundamentally contradictory demands. Perhaps the fact that no one is especially happy means that, actually, they’re doing a good job.