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I personally can't see what in-game advantage it is to be able to change team name for free. How can your team be better just by changing the name of the team?

In Hattrick you can buy to give nicknames to your players and this is for me comparable to that. A non-relevant issue for the game itself. More like a meaningless thing like piercing your player like you can do in Footstar.

Yes, I understand the suggestion better and I agree that the name doesn't create an advantage.

As for changing team names, I think there is a preference for maintaining continuity and seriousness (or whatever) to the game, and teams changing names might not be in that spirit, or something like that. Okay, I'm reasonable. I wouldn't be opposed to the idea that a team can change it's name, as long as it isn't a regular thing. Maybe once every, say, 8 or 10 seasons. I can understand that sometimes a manager will have a personal reason for wanting to change it, and if a manager is around so long then this is the sort of manager that is really part of the community, probably not the sort of change teams capriciously. The Washington Bullets changed to the Washington Wizards because of the owner's personal reasons (he suddenly hated that his team was named "Bullets"). The Supersonics became the Thunder after a season in Oklahoma City. Now the Sacramento Kings will be moving to Seattle and they'll be the Seattle Supersonics. I get it. Maybe we have managers here who move to a new city, want to name their team after a new girl friend, or something. I'm now down with this, and I even like the idea for non-Supporters, too.

And who says I'm not reasonable?

But I'm not so into the giving nicknames to players idea.

I hear what you're saying about maintaining some continuity, that's the reason why I talked about a minimal number of seasons between two changes (I said 5, but it could be 8, 10... whatever the BB want it to be).
And I agree that it doesn't HAVE to be in the supporter package, but I think it suits it very well. Changing team/arena name goes with team logo, jersey numbers,...

FAs sell for 180~400% what normal players do in bidwars etc.

Where did you get these particular numbers?...
I think it's quite the opposite.

I would very much prefer that you had to request to GMs to change team name and that you had to have a valid reason for do so. Maybe because I am too conservative and really wants to recognize teams over time.

As it is not the case that you have to apply for new team names I certainly prefer if it would be more costly than today. That is also why I suggested that you actually have to pay with real money instead of just wasting a part of your teams budget. Obviously this part is not that high as pretty many teams change name now and then.

I fully agree with Wolph that team names like "Free Agent" and "Retired" should not be possible to chose or change to. It is difficult to create a filter that stops all attempts of unreasonable names and I would rather see a warning or punishment for misuse of team names in such a way. If it is not already clear enough in game manual I would recommend that this is added in game manual so that a punishment is in accord with game manual. It would also make sense to inform about it in game news so that those who misuse team names like this can't say that they did not know. It is unreasonable to expect users to continously read the game manual to see if there are some changes.

Main question is:
If a team chose the name "Free Agent" will that team has any punishment for it? Will the team even be forced to change name?

Why would you want to forbid it ? And why create rules for every special cases that are not even problems ?

A team called Free Agent doesn't magically sell for more, it's just nonsensical and baseless.
There is one team named Free Agent and I hope it will keep its name, it's harmless and an inexistant problem blown way out of proportion.