Street free agent In professional sports , a free agent is a player who is eligible to sign with any club or franchise , i . e . not under contract to any specific team . The term is also used in reference to a player who is under contract at present , but who is allowed to solicit contract offers from other teams . In some circumstances , the free agent ' s options are limited by league rules . The term came into wider use after sports league s 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 . Types . Terms . 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 most North American professional sports players are drafted by sequentially aligning each team from worst to best ( sometimes with a draft lottery factor to avoid having teams intentionally lose their last games to gain higher draft position ) and allowing said teams to claim rights to the top players entering the league that year . Players that pass through an entire draft ( usually several rounds ) without being selected by any of the league ' s teams become unrestricted free agents , and these players are sometimes identified simply as an " undrafted free agent " or " undrafted sportsperson " and are free to sign with any team they choose . The term " undrafted free agent " is most common in the National Football League , where rookies enter directly into the NFL and do not play in a minor league system . Legal provisions in Europe . In the European Union , the 1995 Bosman ruling by the European Court of Justice established the right of free agency 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 players to move within the national league in which they currently play . Usage . Association football usage . 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 " a free transfer " . If a player is 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 . Australian Football League usage . The Australian Football League introduced free agency at the end of 2012 . Out - of - contract players who are not within the top 25 % paid players at their club will become unrestricted free agents after eight seasons of service at one club ; out - of - contract players who are within the top 25 % paid players at their club become restricted free agents after eight seasons , then become unrestricted free agents after ten seasons . Clubs receive compensation in the form of draft picks for the loss of out - of - contract free agents . Players who are delisted will become unrestricted free agents , regardless of length of service ; clubs are not compensated for the transfer of such free agents . Major League Baseball usage . In Major League Baseball , free agents are currently 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 . The next collective bargaining agreement between MLB and its players union , signed on November 22 , 2011 and taking effect with the 2012 season , will dramatically change free agent compensation . Players will no longer be classified by type . Instead , a team will only be able to receive draft pick compensation if it makes its former player an offer at least equal to the average of the 125 richest contracts . However , if a player is traded during the final season of his contract , his new team will be ineligible to receive any draft pick compensation . Restricted free agent s ( RFAs ) are players who have three or fewer 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 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 are players with expired contracts that have completed four or more accrued seasons of service . They are free to sign with any franchise . 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 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 . National Football League usage . 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 these players . 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 , will become 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 2004 , 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 . In addition , any player at least 22 years of age who has not been selected in the NHL Draft can sign with any team as a free agent . 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 . Also in Major League Baseball the larger and more successful teams often trump the lesser income teams from lack of a salary cap . Deadlines . In some leagues , free agency has deadlines . For example , under the most recent 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 window s — during the close season and half - way through the league season . There are exceptions for unsigned professional players in the lower divisions .