AFL open to reviewing free agency compensation system this off-season

Footy’s national draft already seems botched even without clubs attempting to use the free agency loophole. Jon Ralph reveals, that could all soon be a thing of the past.

Football’s national draft is already broken as a competitive balance mechanism without the free agency loophole that the AFL may be about to stop in its tracks.

Free agency rules incentivise battling clubs escorting free agents out the door because they are provided with a wildly unfair compensation selection.

A year after Hawthorn received pick 19 as compensation for departing free agent Lance Franklin, Melbourne secured pick 3 when James Frawley left for the Hawks.

Why?

Because the AFL’s free agency rules tie first-round compensation selection to the draft selection of the club that loses a player.

Finally the biggest change in free agency since its advent in 2012 could be upon us over the summer.

A big change to free agency compensation could be coming. Picture: @EssendonFC/X

The Herald Sun understands the AFL is open to reviewing its free agency compensation formula in the off-season as part of its wider attempts to bring some purity back to the draft.

This year West Coast has a massive reason to nudge co-captain Oscar Allen to Brisbane given they will receive the No. 2 overall draft selection (tied to their No. 1 overall pick) as their prize.

North Melbourne secured pick four for injury-prone defender Ben McKay, while rivals scoffed when the Lions three-year FA deal for Joe Daniher meant the Dons were happy not to match.

Any Allen compensation pick is not at risk but the league has multiple options it could investigate to ensure a fairer system from 2026 onwards.

The league could ensure any first-band compensation pick comes in only as a mid-first-round pick at pick 11 after the teams who missed finals have their first selections.

Or it could tie the compensation to specific selections in the draft – pick 5, pick 10, pick 20 and so on – which better reflects the size of the player’s contract instead of the team’s ladder position.

So a Tom De Koning-sized offer might receive pick 5 or 8 but Allen’s deal might be pick 20.

The greatest problem with the current compensation is that clubs sign up their actual stars before free agency and are happy to dangle players they don’t want for outlandish rival bids.

So West Coast received a first-rounder for Scott Lycett despite him playing 50 games across the seven seasons before his free agency years.

The Cats got a first-rounder for Steven Motlop, the Giants got pick 11 for Zac Williams while the Giants got a first-rounder for Perryman and an end-of-first-rounder for Isaac Cumming.

Neither Perryman or Cumming were in the Giants top 15 players and they snared two first-rounders.

The Hawks got pick 19 for Buddy. Picture: AAP Image/Dan Himbrechts

One year later, the Dees got pick 3 when James Frawley went to Hawthorn. Picture: Colleen Petch.

Using current ladder order and the most recent phantom drafts, St Kilda could have the No. 4 overall pick pushed back to pick nine by three academy bids, an Oscar Allen compo pick and a potential Harry Dean father-son selection at Carlton.

And Essendon’s No. 5 and 6 picks (the second linked to Melbourne) could push back to 10 and 11, while the Dons could also benefit if Sam Draper leaves on a fat Lions free agency contract.

With due respect to Draper, the Dons getting eight years out of Draper then getting a top 12 pick for a player with zero top 10 finishes in the club’s best-and-fairest illustrates what is wrong with the system.

The mood for change at AFL House is strong as the league reviews its NGA model and the draft bidding system under fierce heat from clubs including St Kilda.

With Lions CEO Greg Swann entering the fray as the new football boss, nothing is off the table.

Eradicating free agency compensation altogether seems less likely.

Under the rules, clubs get compensations in various bands – first-round (tied to their pick), end of first-round, second round, end of second round, third round.

In any given year clubs do not know the exact contract that will trigger band one compensation but their guesstimates usually hit the mark.

The Blues will get a top pick if Tom De Koning leaves. Picture: Morgan Hancock/Getty Images

The Eagles could land a massive reward for Oscar Allen’s departure. Picture: Janelle St Pierre/AFL Photos via Getty Images

St Kilda upped their offer to Josh Battle last year, confident if he departed they would secure band one compo (they secured Alix Tauru).

They tried to game the system and even when Battle went for a smaller financial deal they got their top 10 selection.

North Melbourne offered McKay a lucrative deal of around $800,000 a year and while the Essendon contract was slightly under figure that on guaranteed money the Roos still got pick four as compensation.

Compensation is decided by the AFL by ranking every contract of a player 25 and over taking into account a player’s age, average contract length (five plus years for maximum points) and average guaranteed contract value.

If a departing players’ contract falls into the top five per cent of those contracts, they are allocated band one compensation.

Last year Perryman (six years at $900,000) and Battle (between $750,000 to $800,000 a year) comfortably cleared that bar, although a huge increase in the salary cap to nearly $18 million means clubs believe this year’s figure will need to be at least $900,000 a season.

The league needs to pull out every stop to return the national draft to an equalisation measure that allows all clubs who missed September a chance to bounce back hard.

The AFL should continue to tweak the DVI points system so if a premiership contender is able to match a bid for an academy or father-son pick in the top five it effectively decimates that year’s entire draft hand.

St Kilda and Essendon can’t complain too hard because both have secured top-10 picks as compensation in recent years.

But the AFL recognises the value of a more equitable compensation system so in any given year clubs like the Saints and Dons with early-ish picks don’t have them diluted as they will be in November’s national draft.

So West Coast will all but certain to be a recipient of the overly generous scheme before a summer of change.

Originally published as AFL open to reviewing free agency compensation system this off-season