Armour and Levitt: Important moments in team-building: the reserve clause, 1878

From SABR members Mark Armour and Dan Levitt at In Pursuit of Pennants on January 28, 2018:

Boston Red Stockings owner Arthur Soden had a problem. He and the other National League magnates, who had set up their new league just a few years earlier, were losing money. Over the NL’s first three seasons no team turned a profit, and in 1879 only Providence had made money. It was not supposed to be this way. When their league was established in 1876, the NL owners thought they had addressed the flaws of its predecessor, the National Association. Under the leadership of Chicago owner William Hulbert, the man who should really be considered the father of American sports leagues, at its start the NL agreed on four principles soon taken for granted.

First and foremost the owners took control over who could be a member, creating what we now refer to as a “franchise”. No longer could ten guys from Keokuk, Iowa — who might have ponied up a dollar each for the $10 entry fee — compete with established teams from Boston and Philadelphia (as had happened with the National Association). Secondly, the owners granted territorial exclusivity to their member teams. Also, the league created a common schedule so that teams played a similar amount of games against the other teams in the league – the National Association left it up to their member teams to schedule games as they wished, meaning that some teams played vastly more games than others. Lastly, the league registered player contacts with a central office so that teams could not poach players under contract to other teams.

Nevertheless, it was not enough. Most significantly, with most players on one-year contracts, once a season concluded teams would lure players from their competitors by offering higher pay or other perks. Salaries in those early NL years consumed nearly two-thirds of a team’s operating budget. Not surprisingly, having players “revolve” between teams also hurt fan interest.

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Originally published: January 29, 2018. Last Updated: January 29, 2018.