The proposal that could overhaul AFL’s free agency compensation system

Greater transparency and the radical idea of tying compensation to the draft value index rather than the ladder position of the team that loses a key player are among submissions clubs have made to the AFL on the contentious free agency compensation system.

The current compensation system, under which the Kangaroos received pick three for losing Ben McKay to the Bombers and could lead to high draft picks for St Kilda, North Melbourne and Gold Coast if Josh Battle, Cam Zurhaar or Ben Ainsworth leave their respective clubs, has remained consistent since free agency was introduced in 2012.

But the league’s ongoing review into player movement and competitive balance is prompting a rethink.

Ben McKay’s move to Essendon as a free agent benefited both clubs but came at a cost to those clubs in the middle of the ladderCredit: Getty Images

The system has been criticised when clubs losing players to free agency finish low on the ladder and receive a compensation pick immediately after their first-round selection for a player who would not be traded for similar value on the open market, although one list manager who spoke on the condition of anonymity said compensation was essential to help the bottom clubs as long as the AFL disclosed what contracts were required to fall into each band.

In 2020, when Essendon received pick seven for Joe Daniher’s move to the Lions, the compensation pick the Bombers received was considered high because of the star forward’s injury history. In the same season, the Giants received pick 10 for losing Zac Williams to Carlton. Melbourne received pick three when James Frawley joined Hawthorn at the end of 2014.

The Hawks famously received pick 19 as compensation when Lance Franklin joined Sydney at the end of 2013 as they had won the premiership that season, so their first pick was 18.

Cam Zurhaar is one of the few restricted free agents that remains unsignedCredit: AFL Photos

One submission, according to an industry source who wanted to remain anonymous ahead of the CEOs meeting in Perth next week when competitive balance and player movement rules will be high on the agenda, contained a suggestion to tie the compensation system to the draft value index, which allocates points to each pick.

That would mean compensation would be decided using a formula that would spit out a points score based on a player’s new contract that could be matched to the draft pick points closest to that number.

Such a system would enable compensation to more closely match the player’s rating rather than it being dependent on where their original club finished.

It could mean, for example, that if McKay’s contract had yielded 1000 points under the current draft value index, the Kangaroos may have been allocated pick 17 – which carries 1025 points – rather than pick three because North Melbourne finished second last in 2023.

10 controversial compensation decisions

• 2012: Jared Rivers, joined Geelong. Compensation for Melbourne: none
• 2013: Lance Franklin, joined Sydney. Compensation for Hawthorn: pick 19
• 2013: Dale Thomas, joined Carlton. Compensation for Collingwood: pick 11
• 2014: James Frawley, joined Hawthorn. Compensation for Melbourne: pick 3
• 2015: Scott Selwood, joined Geelong. Compensation for West Coast: pick 37
• 2017: Tom Rockliff, joined Port Adelaide. Compensation for Brisbane Lions: pick 18
• 2017: Steve Motlop, joined Port Adelaide. Compensation for Geelong: pick 19
• 2020: Joe Daniher, joined Brisbane Lions. Compensation for Essendon: pick 7
• 2020: Zac Williams, joined Carlton. Compensation for Giants: pick 10
• 2023: Ben McKay, joined Essendon. Compensation for North Melbourne: pick 3

Clubs have long been angered at being pushed back in the draft order because of a deal involving other teams, particularly with there being a lack of transparency about the size of the contract that was needed to deliver a particular pick. They have also been upset at gilt-edged picks at the top of the draft being handed out as compensation.

The AFL does not reveal player salaries.

One club CEO, who preferred to remain anonymous to speak freely, said he would support a system that did not involve such high picks being allocated as compensation for anything other than the very best players.

List management sources at two other clubs told this masthead, on the condition of anonymity, that they would be happy if free agency compensation was scrapped. The players’ association has always been concerned that the compensation process restricts player movement, particularly with clubs potentially losing compensation if they bring in a free agent in the same year a free agent leaves.

The AFL has been expected to add the length of contract to the formula that allocates points and a ranking to each player based on average guaranteed contract value and the age of a player. Player rankings are stratified into bands, with only the top 5 per cent of players allocated first-round compensation.

Clubs are expecting to understand more about the direction player movement rule changes are heading and whether a revised draft value index system, which is expected to only allocate points to the first 54 picks (or three rounds) when it is introduced, will apply for this year’s draft.

Several clubs are angry that a change would be introduced immediately, having made decisions at previous drafts based on the expectation that the existing system would remain in place. One club CEO told this masthead, on the condition of anonymity so they could speak freely, that they had traded players out due to a draft strategy modelled on the current system.

The AFL Commission would need to sign off on any changes to the player movement system at its meeting in August.

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