From the President: Free Agency

Dear Members,

The AFL Commission yesterday announced its policy on free agency, which is a concept that allows certain players at certain times of their career to move more easily between clubs.

The views expressed here are my views as your Board was not privy to the AFL model before it was released yesterday.

When briefing club presidents yesterday, the AFL Commission Chairman Mike Fitzpatrick said clearly that these changes were not subject to club president or club board approval. In short, a fait accompli.

That is not to say the AFL has not met with employees of clubs such as CEOs, Football Managers, some players and other staff from time to time. In fact, Hawthorn’s General Manager - Player Personnel and Strategy Chris Pelchen was on the working committee that assisted on recommending these changes, but the governance responsibility of club boards to their members, and their responsibility for the development has again been totally ignored.

Let me therefore give my assessment of both the detail of the new free agency rules to come into effect from 2012 and the challenges and risks to the long term welfare of the game and some clubs.

Was a free agency arrangement needed?

In other words was there something ‘broken’ with the way in which the AFL has been conducting its affairs? I would argue no. While no system is perfect, the one that we work under is not bad. Players can change clubs; it happens every year.

Sometimes it is easy, such as in the cases of Josh Kennedy and Ben McGlynn. Both received offers from Sydney late last year and decided their futures would be better secured with that club. Josh came to the Club, we discussed it with him and his family, and while saddened by his decision we agreed with his assessment of his current playing situation and we helped to facilitate his move. Ben was a little more abrupt, but again we did not stand in his way, and both players became part of trade week.

We secured former Kangaroo Josh Gibson and former Port Adelaide player Shaun Burgoyne through the trade and ex Brisbane Lion Rhan Hooper through the draft.

Luke Ball’s passage from St Kilda to Collingwood was not as easy but he still ended up at the club of his choice.  And of course the draft and trade are still available, but the idea of the trade in particular was to generate movement for players who wished to move.

So maybe not perfect, but clearly moving from one club to another was do-able.

Is the AFL free agency arrangement better than what we had?

If you are going to change something that is not broken, what you put in its place has got to, in my opinion, be demonstratively better. I doubt that is the case for the reasons I will spell out in this communication to you.

What was the reason for the AFL introducing free agency?

Regardless of the spin the AFL may be putting on their reasons, the truth is they were trying to buy peace with the AFL Players Association (AFLPA) who wanted free agency introduced.

There was the continued implied threat that if free agency was not introduced, the current rules relating to the salary cap and draft procedures could be challenged in the courts of law. Given the restraint of trade laws that exist in this country, the AFL’s rules could be found to be in breach of those laws, throwing the current system by which the AFL operates into disarray. 

You will have heard many times in the last 20 hours Andrew Demetriou or Adrian Anderson of the AFL saying they wanted to secure peace with the AFLPA and avoid industrial disruption. That is spin for avoiding any potential legal action.

The AFL wanted “peace in our time,” a phrase I have heard once before in my lifetime and it did not buy peace. In this case the AFL has achieved so-called peace with the AFLPA until 2016, and only with the AFLPA. Any player could, if he wished, challenge the rules under which the AFL operates in the appropriate courts of Australia.

In fact, the new free agency arrangement is not free except in one case - delisted players. Free agency rules will add more restrictions, not reduce them. In short unless goodwill applies, as has happened to date, a challenge to our rules has more grounds on which to be based and succeed.

So under threat of court action the AFL has reacted, but has only made the matter worse.

What are the ingredients of the new free agency arrangements?

1. Any player delisted by a club can become a free agent. In other words, that player can move to the club of his choice if another club offers him a contract. I agree with this, but that could have happened at any time, and it makes sense.
   
   
2. Players with less than eight years service are not free agents and therefore cannot move to any other club. If not re-contracted at any time within or beyond the eight years, the player may be delisted, may be traded or may choose to enter the draft.
   
   
3. Players who have served at one club, whose contract expires after eight years at that club, and who are not in the top 25% of earners at that club, are free agents and can move to the club of their choice if offered a contract.
   
   
4. Players who have completed eight years at one club and are in the top 25% earners are granted restricted free agent status. This category is a little more difficult to explain. If after eight years a club offers a player at another club a  four year contract at $400,000 a year, the club where the player currently resides has one opportunity to offer their player the same conditions/terms as the new club, this is what is now referred to as matching. If that occurs the player must stay at his original club for no longer than two years, after which that player will become a free agent and can go anywhere.

What are the risks in the application of this model?

1. There are none with point 1 and 2 listed above.
   
   
2. In regards to the third point above:  clubs spend an extraordinary amount of time and resources to draft an 18 year old player. Except for the very gifted player it may take two, three or four years before that player becomes a regular member of his club’s team. By the time the player reaches the eight year window to free agency he might be just at his prime, at his most serviceable to his club. At that stage of his career he might not be in the top 25% of paid players at his club, so he is free to move. But he could be a very valuable player, a position player in the coach’s plan to win a premiership. Gone. Years of planning lost to the club. It is possible a club could lose several eligible players every couple of years and it is certainly possible the club could lose a valuable player every year.
   
   
3. In regards to point four above.

This is the most extraordinary aspect of the new proposal, and one that is open to rorting.

A) Firstly it puts into place more restraints of trade than exist now, and any dissatisfied player could seek redress in the courts. The very thing the AFL has tried to avoid.

B) The player might again be in the prime of his career, only 26 years of age, and in the top 25% earners at the club. The new club makes its offer, it may or may not be genuine in its approach, it may be trying to cause harm, financial or otherwise to the existing club. The existing club has the right to match the offer, but that might entail more money than they can really afford, or worse a four or five year contract, which is irresponsible for a club to enter into in this day and age. Again a responsible club might lose a vital player, an irresponsible club might purchase the player but put its club into a shocking position if anything should happen to that player early into his contract with the new club.

C) Sadly this aspect of the arrangements will elevate the position of the player manager to one never envisaged, and one that could lead to all sorts of conflicts.

Sadly these arrangements are going to lead to manipulation of players and clubs all year every year, as managers, some players and clubs start pursuing players. Names will be mentioned in the press. Players’ concentration will not be with the club with whom they are employed.

The AFL has been saying to justify the introduction of free agency that it exists in every other professional code of sport. But they forget one very important point, all the codes they are quoting are commercial operations. They are owned by individuals, or groups of people or businesses. AFL football in Australia is a community game, owned by the community, and the AFL’s proposal puts our unique game at risk. Not at risk of private ownership - we have tried that and Sydney and North Melbourne failed - but of increasing the risk of commercial failure by some clubs.

The AFL’s proposal fails to appreciate that our game depends on the club loyalty of members and in particular certain players. Sponsors are generally attracted to clubs with larger memberships.

The AFL’s proposal encourages the movement of players, it goes against the emotion of club members and supporters who keep clubs alive and in turn keep the competition alive, so that the media pays huge fees to buy the rights to the game.

I am sorry I have taken so much of your time and I may not have expressed myself well, but I am worried, very worried, about where these changes may lead.

You know me well enough to know I am not fearful of change, but not change for the sake of it, not change under threat, not change to “buy peace in our time.”

The stronger clubs will survive these changes, I suspect they will grow stronger, but I fear for those clubs in the bottom half of the ladder from 2012. The competition will end up with a two-tiered structure, and in particular a second tier with reducing membership and less commercial success.

We at Hawthorn have two years to further improve our position, to prepare for what lies ahead. If you have not yet renewed your membership please do so. From 2012 we are about to enter the unknown, from when this genie, released from Andrew’s bottle will never able to be returned, and the fundamental concept of our game will be changed forever to imitate the failures of private ownership of competitions where? In the USA and Europe.

Have a good day.
Jeff Kennett