The Demise of the Reserve Clause: The Players’ Path to Freedom

This article was written by Stew Thornley

This article was published in the 2006 Baseball Research Journal


A moment that marked a dramatic shift in the power structure between major league baseball players and owners occurred on December 23, 1975, when an arbitrator’s decision brought an end to the primary effects of the reserve clause. Prior to the decision,the pendulum of power had been firmly with the owners. The players had made some gains, particularly with the formation of a viable union, but the owners were still in control. However, once the owners lost the ability to bind players to their teams indefinitely,which had been the result of the reserve clause for nearly 100 years, the pendulum swung greatly toward the players. The owners have spent the ensuing 30 years trying to reverse its direction.

The reserve clause bound a player to his team for as long as the team, not the player, desired. Even after the contract itself expired, a player remained tied to the team. He could be traded, sold, or released, but the player himself could not initiate any moves on his own.

The reserve clause had its origin at the end of the 1879 National League season and soon evolved into the form it would keep well into the second half of the 20th century.1

The reserve clause kept a player from choosing where to work for whatever reason, fiduciary or otherwise. And simple economics demonstrate how this inhibited the player’s salary with regard to what he could have received in a free market.

A Definition 

Although it was widely accepted that players had no freedom in determining their fates and destinations, it appears that few people from either side, players or owners, gave much thought to the mechanics of the reserve clause.

The clause was codified into the Uniform Player’s Contract, eventually becoming Paragraph 10A of the document:

On or before December 20 (or if a Sunday, then the next preceding business day) in the year of the last playing season covered by the contract, the Club may tender to the Player a contract for the term of that year by mailing the same to the Player at his address following his signature hereto, or if none be given, then at his last address of record with the Club. If prior to the March 1 next succeeding said December 20, the Player and the Club have not agreed upon the terms of such contract, then on or before 10 days after said March 1, the Club shall have the right by written notice to the Player at said address to renew this contract for the period of one year on the same terms, except that the amount payable to the Player shall be such as the Club shall fix in said notice; provided, however, that said amount, if fixed by a Major League Club, shall be an amount payable at a rate not less than 80 percent of the rate stipulated for the next preceding year and at a rate not less than 70 percent of the rate stipulated for the year immediately prior to the next preceding game.2

More than 200 words, much of it devoted to explanations of timing and salary-reduction limits, the clause has its essence in the 64 words bolded in the above paragraph. If a player and team could not come to terms, the team could unilaterally renew the player’s contract for one year.

While teams had this option, it wasn’t one they had to exercise. Just having the ability to unilaterally renew a contract meant they never had to. If a player didn’t like the contract being offered, his only option, hardly a good one, was to hold out. Thus, for many years the reserve clause served its function as owners and players routinely accepted the effect of the clause without serious scrutiny as to how it worked.

Open to Interpretation

The reserve clause was an iron cable that bound a player to his team, or so everyone thought until the mid-1960s, when growing awareness of the clause’s wording brought about a realization that it was actually a thin thread. 

Although long considered unambiguous in its power, the reserve clause included a phrase that was open to interpretation. “To renew this contract for the period of one year” left hanging the question of what would happen after one year. Could a team renew the contract again (and again and again, into perpetuity, if necessary), or could it exercise the contract renewal only once?

The question was significant because if the answer was ruled to be the latter, it created not just a window but a wide-open door to free agency for a player. All he would have to do was report for duty without putting his signature to a contract, thereby forcing the team to unilaterally renew the contract for a year if it wanted to retain control of the player. After a year, if a team didn’t have the ability to renew the contract again, the player would be a free agent.

If this was so simple, why weren’t players doing it? Because it was still a question whether a team could renew a contract only one time. Through the 1960s, the arbitrator of this issue would be the commissioner of baseball, an employee of the owners who surely would not answer the question in this manner.

A route to Free Agency 

Meanwhile, Marvin Miller was envisioning a different approach. The 48-year-old Miller had experience as an economist in the United Steelworkers of America when he became the first full-time executive director of the Players Association in 1966. Miller said he discovered the potential in Paragraph 10A even before he officially took office. “I did a double take the first time I saw it,” Miller said. “I couldn’t believe the whole reserve system rested on this.” Miller said he knew then that two elements were necessary for a challenge: a grievance system with an impartial arbitrator and a player who felt strongly enough about challenging Paragraph 10A to withstand the “brick bats” that would be thrown at him.3

The formula Miller had for challenging the reserve clause did not emerge right away. Although the players sought a revision of the reserve clause as well as an impartial arbitrator to supersede the commissioner and resolve disputes, they initially had to settle for simpler gains. However, in 1968 they did achieve a collective bargaining agreement (CBA, also known as the Basic Agreement), the first in professional baseball history, which included a procedure for handling grievances.4

Although the commissioner would act as the arbitrator of the grievances, Miller said it was still significant. “Nineteen-sixty-six and 1967 there was no grievance procedure—and no grievances,” he explained. “First came the procedure, and then the players had to be taught about the procedure and that they had the right to grieve. The owners claimed that there was a procedure in the past, but they were unable to produce a record of a single grievance having ever been filed.”5

Miller said the first grievance filed by the Players Association after the CBA was reached was on behalf of Curt Blefary, who had been fined by his team, the Baltimore Orioles, for taking part in an organized basketball league in the offseason. Although Commissioner William Eckert’s ruling went against  Blefary,  Miller  characterized  it  as a “great thing” since it outraged the players and helped to solidify them.6

The players demonstrated solidarity again, over the 1968–69 offseason, by collectively refusing to sign their individual contracts until negotiations over their pension fund were settled. It was new commissioner Bowie Kuhn who helped end the dispute just prior to the March 1969 opening of spring-training camps.7

The players had another cause that brought them together in 1969, when they backed Curt Flood’s lawsuit against baseball, which challenged the sport’s exemption from antitrust laws and in turn the reserve clause. Flood, an outfielder who decided to fight baseball after being traded from the St. Louis Cardinals to the Philadelphia Phillies in October 1969, ultimately lost his case; however, the battle produced additional solidarity among the players.8

The players stood together again in 1972 in another dispute over the pension, one that resulted in a strike that delayed the beginning of the regular season. (Within a year, the pension was incorporated into the CBA.) Charles Korr, in The End of Baseball As We Knew It: The Players Union, 1960–1981, called the 1972 strike one of the union’s defining moments, writing that it “established the credibility of the union and showed the players that a solid union could prevail in a battle against the owners.”9

Potential Challenges to the Reserve Clause

Barely noticed amid all this activity was that in the 1970 CBA negotiations the players got an impartial arbitrator to hear their grievances. (It was actually a three-member arbitration panel, which contained one representative from labor, one representative from management, and an impartial arbitrator agreed upon by both sides.) The commissioner would no longer decide all disputes, only those concerning the integrity of the game.10

The first piece was in place for the players. Next they would need someone to challenge the interpretation of Paragraph 10A. Although Al Downing had had his contract unilaterally renewed by the New York Yankees during spring training in 1969, he had no thoughts of becoming the test case for the players. First, the commissioner would still adjudicate such questions; in addition, Downing had little leverage. Coming off an injury-plagued season that left him with little value on the open market, Downing was actually fearful of being cut loose by the Yankees, and he ended up signing a new contract before the regular season opened.

It wasn’t until 1972 that anyone played into the regular season on a renewed contract. Catcher Ted Simmons had had a solid season in his first full year in the majors, playing for the St. Louis Cardinals in 1971. He rejected his club’s contract offer the following spring. Rather than follow the usual, but internecine, path of holding out, Simmons wanted to get in shape and play while continuing to negotiate with the Cardinals. He reported to spring training, forcing the Cardinals to renew his contract.

“Simmons refused to be bluffed into signing a new unsatisfactory contract in order to be ‘allowed’ into uniform,” said Marvin Miller. “The union advised [him] that once his contract was renewed, he was under contract and could not be barred from spring training or from the regular season, even if he refused to sign that contract.”11

Miller also said he never made recommendations to the players, that the initiative  had  to come from them. He simply advised the players as to what their rights were.12

Although Simmons, as had been the case with Downing three years earlier, was only trying to negotiate a better deal for himself, some of the more astute sports columnists around the country were picking up on the potential significance of his situation.13 What if he went the entire season without signing a new contract? Would he become a free agent?

The question never came before the arbitration panel as Simmons signed a new contract with St. Louis on July 24. The Cardinals said the signing— reportedly for two years at $35,000 per year—was made possible by the Federal Pay Board’s decision to exempt athletes from wage controls then in effect.14

However, it’s possible that the Cardinals might have also been feeling pressure to sign Simmons, lest he become the test case for the players. Simmons later said the Cardinals had “buckled under” and given him exactly what he had been requesting.15 Simmons reportedly had considered challenging the renewal clause, possibly in the courts as opposed to through a grievance to baseball’s arbitration panel, but he had been adamant at the time that he would rather settle his contract situation with the Cardinals. “I don’t think I ever seriously considered that,” he said of a court challenge. “If I had gone to court and won, I don’t think I could do anybody in the future in baseball that much good, if you know what I mean.”16

The owners’ fear of a test case might have benefited players who followed Simmons’s lead and went into the 1973 season on renewed contracts. According to The Sporting News Official Baseball Guide 1974, seven players opened the 1973 season without having signed new contracts and were playing on renewed contracts: Stan Bahnsen, Rick Reichardt, and Mike Andrews of the Chicago White Sox; Jim Kaat of Minnesota; Dick Billings of Texas; Fritz Peterson of the New York Yankees; and Jerry Kenney of Cleveland.17 (Kaat had actually signed a contract with the Twins the day before the regular season began.)18

Bahnsen, Billings, and Peterson signed new contracts with their teams during the 1973 season while Kenney, Reichardt, and Andrews were released from their teams. “The Chisox probably could have easily sold Reichardt and Andrews for the $20,000 waiver price but instead asked for and received waivers on both players for the purpose of giving them their unconditional releases, a process in which the Sox, in exchange, received $1 for each player,” according to Jerome Holtzman in the “Review of 1973” in The Sporting News Official Baseball Guide 1974. “It was believed that the Sox chose this route essentially in fear of a subsequent grievance by the Players Association, which may be eager to test the validity of the renewal clause in a courtroom.”19

In addition to the leverage individual players might have been getting because of the owners’ fear of a challenge to the reserve clause, collectively the players were making gains as the owners were refusing to budge on modifying the reserve clause in collective bargaining.

In negotiations for a new CBA, to replace the one that expired at the end of 1972, the players sought a loosening of the shackles, reportedly in the form of a proposal for a player to become a free agent if not offered a certain salary, depending upon the player’s length of service.

The new agreement contained no such provision. However, veteran players—those with more than 10 years in the same league and five years with the same team—would have the right to veto a trade. In addition, the owners agreed to salary arbitration for players with more than two straight years of service in the majors or three years of non-continuous service. Although this wouldn’t allow a player to choose the club he wanted to play for, it at least meant players could ensure that their salaries were in line with others of their caliber.20 “Salary arbitration has been a major factor in eliminating gross inequities in the salary structures from club to club (and sometimes on the same club),” wrote Miller in his 1991 autobiography.21

These were significant gains for the players, particularly the salary arbitration, which remains today and continues to vex the owners. Not only that, the players kept the owners nervous regarding the interpretation of the reserve clause as two more, Sparky Lyle of the New York Yankees and Bobby Tolan of the San Diego Padres, started the 1974 season on renewed contracts. (One of the reasons for the decline of players going unsigned into the regular season in 1974 was because of salary arbitration, which started that year. Many players resolved their salary disputes in this manner rather than refusing to sign contracts.)

On the final day of the regular season, Lyle signed a two-year deal with the Yankees, one that covered the nearly completed season and the 1975 season, but Tolan finished the 1974 season on a renewed contract. On October 17, the Players Association filed two grievances. One was specifically on Tolan’s behalf, requesting free agency for him; the other, more significant, requested clarification of the renewal clause, which could mean free agency for any player who played out his option in this manner.22

Tolan’s case reached the arbitration panel, but on December 9 he signed a new contract with the Padres. He received the salary increase he had been seeking for 1974 along with another increase for his 1975 contract. The following month the Players Association dropped the grievances that had been filed on Tolan’s behalf.23

If it was the intent of the owners to continue to postpone a test case, they were succeeding—in a sense. The question was how expensive was it becoming for them to do so. Would Tolan have received what he wanted if not for the fear by the owners that he could become a free agent—and take everyone else along with him? Were owners more likely to accede to the requests of players on renewed contracts? Marvin Miller contends that this was the case, that “players were picking up gradually that they had leverage by the threat of being a test case.”24

Catfish Hunter Grabs the Headlines

As Tolan was signing his contract, another player was in the process of getting his freedom, and it was this case that dominated the news. Oakland A’s pitcher Jim “Catfish” Hunter was claiming to be a free agent on the grounds that his owner, Charles Finley, had reneged on his contract by not making payments for deferred compensation as scheduled during the 1974 season. Hunter would be the biggest free agent ever to hit the market, coming off a season in which he had won 25 games and the Cy Young Award, if he was successful. And he was.

After deliberating two weeks, Peter Seitz, the impartial member of the arbitration panel, ruled in Hunter’s favor in mid-December. The circus scene that developed later in the month—team representatives lining up at the office of Hunter’s attorney in the small town of Ahoskie, North Carolina—was a story no media outlet could resist, particularly when Hunter finally signed a five-year deal with the New York Yankees worth more than $3 million, a then unheard-of amount (although reportedly not the highest offered).

While the story was surely an attention grabber, Hunter became a free agent in  a  way  that set no precedent for any other player (except, of course, for anyone fortunate enough to play for an owner foolish enough to be as remiss as Finley). Mostly ignored in this frenzy was what could have happened had Tolan been granted his free agency, which would have opened the door to everyone else. So little attention was paid to Tolan’s signing that it was mentioned in a one-paragraph item a “Sports News Briefs” section of the New York Times.25

Still, the Hunter case was significant in that it provided an indication of how restrained player salaries were because of the reserve clause. The owners used the situation as an example of how salaries would escalate out of control with rich teams (such as the Yankees) snapping up the biggest stars if others were allowed to sell their talents in an open market. Emil “Buzzie” Bavasi, president of the San Diego Padres, reported to have been one of the highest bidders for Hunter, said, “What we saw happen here fully demonstrates the importance of the reserve clause. This manifests why we can’t afford to change the reserve rule. The richest clubs would offer the top players the biggest salaries and the biggest bonuses.”

Marvin Miller countered by saying, “ The Hunter case established zero about what would happen in a free market. Here we had a supply of one and a demand of 24 [clubs in the major leagues at that time]. Obviously, when the supply is one and the demand is great, prices will go up dramatically.”26

Privately, however, Miller made sure the players realized how much free agency could be worth to them. The Hunter experience, he contended, displayed “concrete evidence” of how much salaries were held down by the lack of freedom players had. He added that freedom, not just money, was a significant issue to the players, although the media never touched on this, focusing only on the money issue. Beyond the dollars, players wanted the opportunity to choose where to play; for some players the motivation was to get to a team that was thin in talent at their position, thereby providing a greater opportunity for playing time. In Hunter’s case, getting out of Finley’s clutches was more important than the money. “There were many valuable things in freedom that had nothing to do with money—but money was there, too.”27

The Hunter case increased Miller’s hopes that some freedom could be gained through collective bargaining (which would take place in the next year as the Basic Agreement was expiring at the end of 1975). Before the Hunter decision, Miller said he would never have recommended a strike as a means of challenging the reserve clause. After the Hunter decision, a strike became a viable strategy should they need it.28

The Final Beginning of the End

Beyond negotiations, the opportunity to end the reserve clause through a grievance remained. The 1975 season began with three players on renewed contracts, Andy Messersmith of the Los Angeles Dodgers, Richie Zisk of the Pittsburgh Pirates, and Dave McNally of the Montreal Expos. Zisk played through the regular season on the renewed contract but signed a new contract before the playoffs began that fall.29

That left Messersmith and McNally as the potential challengers to Paragraph 10A. Messersmith wanted a no-trade clause in his contract, a provision the Dodgers were reluctant to agree to. It’s possible that they would have given in, however, if not for the presence of McNally.

McNally was significant because he had retired during the season. Following an outstanding pitching career  with  the  Baltimore  Orioles (in which he had four consecutive seasons with at least 20 wins), McNally had been traded to Montreal after the 1974 season. However, after a good start with the Expos, he struggled and, after losing six straight games, retired in June 1975, and eventually returned to his hometown of Billings, Montana, where he operated a car dealership with his brother.

Even though he was no longer pitching, McNally, because he had begun the season on a renewed contract, would be eligible to claim free agency after one year. While it wouldn’t benefit him, it would mean much to the current and future players. Since he was retired, there wasn’t any way he could be tempted to sign a new contract. Or was there?

Marvin Miller says McNally called him in November to report that Expos president John McHale had come to Billings and tried to get him to sign a contract. The reported offer was for $125,000 for the 1976 season along with a $25,000 signing bonus, which McNally could keep even if he didn’t pitch again.

However, McHale says his trip to Billings occurred soon after McNally left the Expos, and he was trying to persuade the pitcher to return to the team immediately. McHale said he was trying to salvage something from the trade with Baltimore to take the pressure off Expos general manager Jim Fanning, who was on the hot seat as a result of the trade. (The other major league player the Expos got in the deal was Richie Coggins, who barely played for Montreal because of a thyroid infection. In June, at about the same time McNally retired, the Expos put Coggins on waivers. Meanwhile, the players the Expos gave up in the deal, Ken Singleton and Mike Torrez, were having good seasons for the Orioles.)

McHale denies offering McNally a bonus that could be kept even if he didn’t pitch again but says he “may have offered him [McNally] more money to come back.”

McHale’s offer was viewed by some as a sham, nothing more than a bribe to remove McNally from the test case. If McNally signed a new contract with Montreal, the Dodgers could then renew their efforts to sign Messersmith, removing the final possibility for a challenge in 1975. McHale maintains that wasn’t the case. “I had never even given a thought that it had anything to do with the player relations problem. That was not the motivating factor for me to go to Billings. . . . I was pulling out all the stops [to get McNally to return to the Expos]. I couldn’t have been more serious about wanting him to come back.”30

Regardless of McHale’s intent, McNally did not sign a new contract. With a grievance now assured because of McNally, it meant that the long-awaited challenge to the reserve clause would finally happen. As a result, the Dodgers didn’t bother to try and sign Messersmith. They had to resign themselves to having his, and others’, fate in the hands of the arbitration panel.

The Players Association filed grievances on behalf of Messersmith and then McNally in early October.

The Decision

At the heart of the Players Association’s case before the arbitration panel was the argument that the word “one,” when used in Paragraph 10A, meant a single year rather than a rolling number of one-year renewals stretching into perpetuity. The owners’ argument was that they had the right to renew the entirety of the contract, including the right to renew the renewal provision.

The hearing was held in the latter part of November and early December of 1975. Miller and owners’ representative John Gaherin quickly ruled in favor of their respective employers.

Just before Christmas, reports came out that Peter Seitz, the impartial arbitrator, would rule for the players. Even so, Miller said he felt great trepidation when the decision was released on December 23. He immediately turned to the final page of the document containing the decision, then sighed with relief as he saw what Seitz had ruled, that Messersmith and McNally were free agents.31

McNally stayed retired, and Messersmith, free to deal with anyone, eventually chose the Atlanta Braves as his next employer, but the significance of the decision went well beyond either player. The door to free agency was open. A player could refuse to sign a new contract, forcing his team to unilaterally renew his contract for one year. After that year, since the team could not renew it again—the crux of the issue decided by Seitz—the player would then be a free agent.

While Seitz’s decision resulted in freedom for the players, he made clear that it wasn’t his job to decide on the merits of the reserve clause. He maintained that the issue before the arbitration panel was not “to determine what, if anything, is good or bad about the reserve system. The panel’s sole duty is to interpret and apply the agreements and understanding of the parties.”32 In other words, the demise of the reserve clause was not created by Seitz but by the wording of the contract itself.

Nevertheless, Dick Young of the New York Daily News, in his column entitled “Young Ideas” (considered a misnomer by many), blasted Seitz with typical intemperance. Young’s opening read, “Peter Seitz reminds me of a terrorist, a little man to whom nothing very important has happened in his lifetime, who suddenly decides to create some excitement by tossing a bomb into things.”33

Other Options for the Owners

Were the owners really stuck in 1975 when there was no way to get Dave McNally to sign a new contract? What if the Expos had just released McNally, similar to what had been done in 1973 with the White Sox with Rick Reichardt and Mike Andrews and the Indians with Jerry Kenney? That would have made McNally a free agent but without setting a precedent that could affect others.

In a telephone conversation in February 2003, when this question was asked of Marvin Miller, he replied that he had never thought of the possibility. A follow-up letter to Miller the next month included the statement “McNally would have been a free agent without setting a precedent in the process” had the Expos released him. Miller replied, “Given the circumstances, I do not agree.”34

Even if the owners could have indefinitely postponed a showdown before an arbitrator, the cost of heading off a challenge would probably have become increasingly expensive, as they would have had to continue  to accede to the requests of players, no matter how extravagant they were seen by the owners, to keep them from becoming a test case.

It would appear that the owners had no good choices in hanging on to the reserve clause.

Of course, there had always been another way. All along, the owners could have superseded Paragraph 10A, the troublesome clause, by agreeing to modify the reserve clause through collective bargaining.

In fact, Seitz reportedly tipped his hand on his decision in the Messersmith-McNally case, urging the owners not to force a decision from him but to instead settle the matter in the negotiations then taking place for a new collective bargaining agreement. “That Seitz had urged negotiation was a tipoff of impending defeat [for the owners],” wrote Jerome Holtzman in the “Review of 1975” in The Sporting News Official Baseball Guide.35 If true, it was tantamount to a jury letting a defendant know they were going to find him guilty, giving him the chance to instead cop a deal with the prosecutor. However, the owners pressed Seitz for a decision, even though they knew what it would be, opting instead to appeal his ruling in federal court.

What would the owners have been able to achieve had they bargained at this point rather than allow Seitz to rule on the matter? They probably could not have come out as well as owners in other sports, who did allow players to play out their options but with significant restrictions.

Since the early 1960s, the National Football League (NFL) had operated under a system in which a player could become free to sign with another team. However, the team signing the player would have to compensate the team losing the player with something of equal value (money, a draft choice, or another player or players). This meant that a player could only force his team to perform what was essentially a trade. In this sense, the freedom was limited, especially with regard to the monetary amount a player would be offered by a new team. Under such a system, salaries would still be severely restricted vis-à-vis what one could receive in a truly free market. (Because Commissioner Pete Rozelle would rule on the compensation one team would have to give the other if the teams themselves could not agree, the system became known as the “Rozelle Rule.”)36

Marvin Miller said, “Once we had impartial arbitration, I would not have recommended anything except the most meaningful of reform,” adding that he never would have settled for free agency that called for significant compensation, similar to the Rozelle Rule. But what if the owners had been willing to give something as early as 1968, during the negotiations for the first CBA? Would they have been able to have gotten a system similar to that of their brethren in the NFL? “The thing is,” said Miller, “they never tried.”37

Bowie Kuhn concurs that it was a mistake not to have been flexible on the issue while they had the upper hand and that he had urged the owners to negotiate.38 But the executive contingent— particularly hard-liners such as Bob Howsam of Cincinnati, Paul Richards of Atlanta, August Busch of St. Louis, and later Allan “Bud” Selig of Milwaukee would not let this become a possibility.39

Even in 1975, with their own bargaining position significantly reduced as Seitz considered his ruling on McNally-Messersmith, the owners could have held on to some portion of player control through negotiation. Instead, once Seitz made his ruling, they had lost it all.

Aftermath

The first thing the owners did after the decision came down was fire Seitz, which was the right of either side to do at any time. Then, as expected, the owners appealed Seitz’s decision to federal court. The appeal was based not on the decision itself but that the grievance procedure was not the proper forum for such a case.

“The owners had great confidence in their ability to prevail in the courts,” said Miller, offering an explanation as to why the owners chose this route rather than accept Seitz’s suggestion to work out their differences through negotiations.40

However, the owners were unsuccessful in their appeal, first in the U. S. District Court of the Western District of Missouri and then in the Eighth District Court of Appeals. They had the option of appealing to the U. S. Supreme Court, which they finally chose not to pursue.41

The legal challenges did not end until March 1976, which delayed negotiations on a new CBA, which had expired December 31, 1975. The new Basic Agreement would define the workings of free agency.

“Following the Seitz decision, all the owners could do was bargain with the players on the new Basic Agreement,” said Miller. “This time, the players held all the cards, not that you could tell by the way the owners negotiated. They offered a reserve system that would allow players with nine years’ experience to become a free agent after playing another season on a renewed contract. In other words, it would take 10 years—nine plus the option year—for a player to become a free agent.” Miller added that the owners’ proposal called for a player becoming a free agent only if his team did not offer him a certain salary. Other restrictions called for compensation to the team losing a free agent from the team that signed the player (along the lines of the NFL’s Rozelle Rule) and a limit on the number of teams that would be eligible to sign a particular free agent. Miller was amazed at the chutzpah exhibited by the owners and said it was akin to Robert E. Lee showing up at Appomattox and trying to dictate terms to Ulysses Grant.42

With no agreement on a modified reserve system in sight, the owners ordered a lockout of spring training camps. In his negotiations, Miller faced pressure from the players in different ways. If he gave away too much, he could face litigation from players claiming that the rights gained by the Seitz decision had been abrogated by the new Basic Agreement. “I think the majority of players are willing to make a compromise on a retroactive reserve system,” said Miller at the time. “But the arbitrator’s ruling gave all the players certain legal contractual rights. Not every player would be willing to bargain these away.”43

On the other hand, some players wanted the lockout ended, even at the cost of their newly gained freedom. Miller says he received a call from a member of the Houston Astros, telling him that something had to be done to end the lockout, even if it meant giving up the free-agent rights that the players had just received. Ken Forsch later called Miller to say that Houston general manager Tal Smith had coerced this player into making the call.44

Fearing a split in the players’ ranks, Miller said the players would agree to a structured free agency along the general lines suggested by the owners. On March 17, Commissioner Bowie Kuhn ordered the training camps opened. The 1976 regular season started on schedule as negotiations continued.45

A new four-year Basic Agreement was reached in the summer of 1976, calling for free agency for players with six years of major league service after playing a year under a renewed contract. These players would go into a re-entry draft, in which a maximum of 12 teams, 13 starting after the 1977 season, would draft the rights to negotiate with the player. (The player’s previous team would also retain negotiating rights to the player, and any player selected by fewer than two teams in the re-entry draft would be eligible to sign with any team.)

All players who had not yet signed a contract for the 1976 season would become free agents at the end of the 1976 season, and all players who had not yet signed a contract for the 1977 season would become a free agent at the end of the 1977 season, regardless of whether or not they had six years of service in the majors by that time. (This is how some short-term players, such as Lyman Bostock of the Minnesota Twins, were able to become free agents.)46

The new system called for compensation to a team losing a free agent, but it wasn’t as significant as what the owners had hoped for. A team signing a free agent had to give the team losing the player one of its picks in the next amateur draft.47 Dworkin notes that if the team acquiring a free agent was in the bottom half of the selecting clubs in the re-entry draft, it would have to give up its first pick in the upcoming amateur draft to the team that lost the player; if the acquiring team was in the top half of the re-entry draft, it would give up its second pick. Teams signing more than one free agent would give up draft choices in succeeding rounds. (Amateur draft choices in baseball are not as coveted as in some other sports, particularly football and basketball. Baseball players entering pro ball usually require time to develop in the minors and, in general, the prospects are more uncertain regarding how good the players will eventually be.)

The first re-entry draft was held November 2, 1976, and involved more than 20 players who had played on renewed contracts through the 1976 season. Two days later, Bill Campbell, a relief pitcher who had made $23,000 with the Minnesota Twins in 1976, signed a four-year deal for $1 million with the Boston Red Sox. Marvin Miller had expressed concern about the owners colluding to not draft and sign free agents, but his fears subsided as many other top players signed million-dollar deals with new teams over the next three weeks. Baltimore’s Reggie Jackson was the last of the big name free agents to sign and got $3 million for five years from the New York Yankees.48

This system of free agency lasted through the remainder of the CBA, which expired at the end of 1979. The owners were adamant in wanting more substantial compensation included in the free agent system to be negotiated in the next Basic Agreement. The players  were  equally  adamant in their opposition. A strike was averted in May 1980 only by deferring the issue of free agency for another year.

A strike did eventually come, wiping out the middle third of the 1981 season. It was finally settled with the agreement of a player pool to be used to compensate teams losing free agents. Teams could protect either 24 or 26 players in their organization (the number depending on whether or not they signed a Type A free agent, meaning one of the top players in the majors as established by a statistical formula). The rest of the players in a team’s organization would be placed in the pool and could be drafted by a team losing a player to free agency. Up to five teams could exempt themselves from supplying players to the pool by forfeiting their right to sign a Type A free agent.49

The significance of the player pool was that it did not require direct compensation from a team signing a free agent to the team losing that player. The new agreement also ended the re-entry draft, and free agents were no longer restricted as to the number of teams they could negotiate with.

Owners’ efforts to restrict player freedom and/or limit salaries continued, including some underhanded tactics. In the 1980s, teams operated in concert and adopted a hands-off policy with regard to signing free agents from other teams for the purpose of keeping salaries down. Arbitrators later determined that teams had conspired against free agents over the course of three offseasons, in violation of the collective bargaining agreement, and the owners had to agree to establish a $280 million fund to distribute to the players affected by the collusion.50

An attempt by the owners to impose a salary cap resulted in a strike that wiped out the final portion of the 1994 season, including the playoffs and World Series, and delayed the beginning of the 1995 season. The strike ended after the players lodged an unfair labor practices complaint with the National Labor Relations Board, which sought, and received, an injunction to restore the terms and conditions of the previous Basic Agreement.51 Although the players fended off a salary cap this time, the owners were eventually able to create a “payroll tax” system, calling for a tax on salaries above a certain limit for each team.

Conclusion 

The million-dollar contracts of the free-agent pioneers were significant, even if they look puny in comparison to ever rising salaries in the ensuing decades.

Salaries would have risen even without the abrupt demise of the reserve clause, in part simply because of inflation but also because, most likely, some freedom would have eventually been afforded the players through collective bargaining. Had the owners allowed modifications to the reserve system while they still controlled it, they no doubt would have held on to more than they have with their post-Seitz attempts to restrict salaries and player movement. Their attempt to gain substantial compensation in 1980-81 was doomed but might have been possible had it been offered earlier.

In his introduction to Marvin Miller’s 1991 autobiography, Bill James summed up the futility of the owners: “From 1966 to this moment, the owners have been just behind the curve, always trying to get the players to accept today the offer that would have been acceptable yesterday and generous a couple weeks ago.”52

 

Acknowledgments

The author appreciates the help of Mark Armour and Bill Deane, who reviewed the content of this article for accuracy and made valuable suggestions. I am not a lawyer (although I have had the Miranda warning read to me more than once), so I am grateful for the input from SABR members Mitchell Nathanson and Larry Boes. Charles Korr also answered questions from me and contributed information. Special thanks to Marvin Miller, Bowie Kuhn, and John McHale, who consented to be interviewed.

 

Notes

  1. Al “First Reserve Clause Enacted 100 Years Ago” in “From a Researcher’s Notebook,” Baseball Research Journal. Cooperstown, NY: Society for American Baseball Research, 1979, pp. 9–10; Andrew Zimbalist, Baseball and Billions: A Probing Look Inside the Big Business of Our National Pastime. New York: Basic Books, 1992, p. 4. According to Zimbalist, the National League was “following the lead of the avaricious owner of the Boston club, Arthur Soden,” who proposed baseball’s first reserve clause. “His proposal secretly to reserve five players per team was adopted by the owners at a meeting in Buffalo, New York,on September 30, 1879. The number of reserved players was enlarged to eleven in 1883, twelve in 1885, fourteen in 1887; by the early 1890s the reserve clause had been extended to cover thecontracts of all players.”
  2. James B. Dworkin. Owners versus Players: Baseball and Collective Boston: Auburn House, 1981, p. 63. Dworkin noted that although the clause had been amended slightly attimes, the language presented is from the 1973 collective bargaining agreement, which Dworkin describes as “a fairly standard version of the pre-free-agency reserve clause.” The SportingNews Official Baseball Guide 1975, p. 302, describes Section 10A of the Uniform Player’s Contract: A club can automatically renew the contract of an unsigned player “for a period of one year” with the player entitled to at least 80 percent of his prior salary; The Sporting News Official Baseball Guide 1976, p. 285, Section 10A: “If, prior to March 1, the Player and the Club havenot agreed upon the terms of the contract, then on or before 10 days after said March 1, the Club shall have the right by written notice to the Player to renew this contract for one year.”
  3. Interview with Marvin Miller, May 22, 2003.
  4. The Sporting News Official Baseball Guide 1968, 168.
  5. March 2003 correspondence with Marvin Miller.
  6. Interview with Marvin Miller, May 22, 2003.
  7. The Sporting News Official Baseball Guide 1969, 174, 190.
  8. Leonard “Flood, Backed by Players, Plans Suit to Challenge Baseball Reserve Clause” by Leonard Koppett, New York Times, December 30, 1969, p. 42; Leonard Koppett, “BaseballIs Sued Under Trust Law,” New York Times, January 17, 1970, p. 1; The Sporting News Official Baseball Guide 1970, pp. 302-307; The Sporting News Official Baseball Guide 1971, pp.272-278;The Sporting News Official Baseball Guide 1972, p. 296; The Sporting News Official Baseball Guide 1973, pp. 281-282; U. S. Supreme Court decision of Flood v. Kuhn, 407 U. S. 258 (1972), available online at http://laws.findlaw.com/us/407/258.html.
  9. Korr, The End of Baseball As We Knew It, 246.
  10. The Sporting News Official Baseball Guide 1971, 291.
  11. Correspondence with Marvin Miller, March 2003.
  12. Interview with Marvin Miller, May 22, 2003.
  13. Bob “The Simmons Case—A Touchy Issue,” The Sporting News, July 8, 1972, p. 4.
  14. “Cards Sign Simmons,” New York Times, July 25, 1972, 29; Dick Kaegel, “Simmons Is ‘Relieved’ with 2 Year Contract,” St. Louis Post-Dispatch, July 25, 1972, p. 1C.
  15. The Sporting News Official Baseball Guide 1975, 303.
  16. “Simmons Is ‘Relieved,’” 1C.
  17. The Sporting News Official Baseball Guide 1974, 266–267.
  18. Sid “Kaat Signs,” Minneapolis Tribune, April 6, 1973, p. 2C; Interview with Jim Kaat, April 19, 2003.
  19. The Sporting News Official Baseball Guide 1974, 267.
  20. “New Contract Assures Baseball 3 Years’ Peace,” Los Angeles Times, February 26, 1973, E1; 1974 The Sporting News Official Baseball Guide 1974, pp. 259–263.
  21. Marvin A Whole Different Ball Game: The Sport and Business of Baseball. Secaucus, NJ: Birch Lane Press, 1991, p. 109.
  22. “Lyle Signs with Yanks for 1975—and 1974,” Chicago Tribune, October 3, 1974; The Sporting News Official Baseball Guide 1975, 302–303.
  23. “Baseball Avoids Showdown Over Reserve Clause,” Los Angeles Times, January 14, 1975, D1.
  24. Interview with Marvin Miller, May 22, 2003.
  25. “Sports News Briefs: Tolan and Padres Agree on ’74 Pay,” New York Times, December 10, 1974, p. 62; Leonard Koppett, “A’s Hunter Ruled Free Agent,” New York Times, December 16, 1974, 51; “Catfish a Free Agent—His Price: Million Plus,” Los Angeles Times, December 17, 1947, p. F1.
  26. The Sporting News Official Baseball Guide 1975, 300.
  27. Interview with Marvin Miller, May 22, 2003.
  28. Interview with Marvin Miller, May 22, 2003.
  29. The Sporting News Official Baseball Guide 1976, 285; Oscar Kahan, “Messersmith, McNally Attack Reserve System,” The Sporting News, November 1, 1975, p. 8.
  30. Telephone interview withs with John McHale, October 31 and November 1, 2006; Miller, A Whole Different Ball Game, pp. 244-245; Korr, The End of Baseball As We Know It, p. 152; “Dejected McNally Tells Montreal He’s Retiring,” The Sporting News, June 21, 1975, p. 30; Bob Dunn, “McNally Declares His Decision to Retire is Firm,” The Sporting News, June 28, 1975, p. 17.
  31. Interview with Marvin Miller, May 22, 2003; Miller, A Whole Different Ball Game, 250
  32. “Baseball’s Future Was Not Issue—Seitz,” Chicago Tribune, December 24, 1975, p. A3.
  33. Dick “Baseball’s Reserve Clause Is Dead . . . Maybe,” New York Daily News, December 24, 1975, p. 38.
  34. Telephone conversation, February 15, 2003, and correspondence, March 2003, with Marvin Miller.
  35. The Sporting News Official Baseball Guide 1976, 290.
  36. Paul Staudohar. Playing for Dollars: Labor Relations and the Sports Business. Ithaca, NY: ILR Press, 1996, pp. 65-83; Dworkin, Owners Versus Players, pp. 249–250.
  37. Interview with Marvin Miller, May 22, 2003.
  38. Interview with Bowie Kuhn, February 26, 2003.
  39. Correspondence with Marvin Miller, August 2006.
  40. Telephone conversation with Marvin Miller, February 15, 2003.
  41. The Sporting News Official Baseball Guide 1977, 286.
  42. Telephone interview with Marvin Miller, February 15, 2003; The Sporting News Official Baseball Guide 1977, p. 287; Miller, A Whole Different Ball Game, p. 255.
  43. The Sporting News Official Baseball Guide 1977, 287-288.
  44. Interview with Marvin Miller, May 22, 2003; Miller, A Whole Different Ball Game, 269-270.
  45. The Sporting News Official Baseball Guide 1977, 291.
  46. The Sporting News Official Baseball Guide 1977, 291.
  47. Korr, The End of Baseball As We Knew It, 193; Dworkin, Owners Versus Players, pp. 86–87.
  48. The Sporting News Official Baseball Guide 1977, 283.
  49. The Sporting News Official Baseball Guide 1982, 11.
  50. The Sporting News Official Baseball Guide 1990, 20-21; The Sporting News Official Baseball Guide 1991, p. 25.
  51. Murray Chass.“Labor Board to Seek Injunction against Baseball Club Owners; Action May Open the Way for Players’ Return,” New York Times, March 27, 1995, A1; “Backed by Court,Baseball Players Call Strike Over,” New York Times, April 1, 1995, p. 1.
  52. Miller, A Whole Different Ball Game, xiv–xv.

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