Soccer is an international sport with unusual economics because Free Agency has almost no power and is seldom used by soccer players to change teams. The following is a perspective from an American's point of view, where free agency is incredibly prevalent in other American sports.
A very small minority of soccer players change teams when they are not under contract. Most players are actually 'bought' by another team while under contract for what is called a 'transfer fee'. A transfer fee is essentially when one team/club pays another team/club for the transfer ownership of a player's contract.
The transfer fee concept, known in whole as the 'transfer market', is akin to the American colloquial for a 'trade'. However, in these transfer deals, the overwhelming behavior of clubs is to simply purchase a player's contract as opposed to American football, baseball or basketball, where a trade only involves players or draft picks (Baseball trades seldom include cash-for-player). Soccer's transfer market also differs from other systems because it is an international system which spans 50+ different leagues in 50+ different countries, all governed by an international body, FIFA. But why would free agency in soccer have less power than any other sport?
As far as the business process, there must first be a structure of fees agreed upon between the buying club and selling club. The buying club must then also agree on the personal terms of the salary with the player. This is where the player benefits or at least has some leverage. When the teams agree on a transfer fee, the transfer will not go through without a new contract/salary for the player at the new club. It is highly common for a player to request (and receive) a raise in a transfer negotiation, otherwise they typically reject the transfer to stay at their current club.
I don't understand why a player doesn't wait for their contract to expire, and then seek the highest salary offered by another team. This use of leverage is supposed to exist in a free-market-principled system. This leverage is what so many American players use to gain bigger contracts with their current clubs, or to test the free agency market by negotiating out of contract. Yet you rarely see a soccer player take this course of action.
Some of the elite players are being transferred for tens of millions of dollars. But when their contract runs out, they are suddenly worth $0 in the transfer market. The player doesn't even benefit from the transfer fees -- only the club does. Imagine if more players used free agency -- we would likely see the median price paid in transfer fees plummet.
Some high profile players have sought free agency but this is typically only done by players who are in the twilight of their career (31+ for soccer). Notable examples include Andrea Pirlo, Steven Gerrard and David Beckham. Players at their age are rarely valued at any substantial amount of money (largely because it is assumed they will retire soon and suddenly be worth $0) in the market, so it is not worthwhile for teams to try to get transfer fees.
There are of course a few rare exceptions for players in their prime like Robert Lewandowski, who was once worth over $40 million in transfer fees, who signed a free agency contract with Bayern Munich, because his employing club, Borussia Dortmund refused to make the transfer deal.
I hoped to have an answer for my title question, but in all of my research, I have no answer to why free agency is seldom used by players in international soccer. I am truly asking the following questions and happy to receive comments or answers:
When will free agency finally garner the same power it has in America? Why hasn't it happened yet? And when will it become common for players to negotiate new contracts with new teams on their own terms?
