Players Challenge Baseball’s Reserve Clause Summary

  • Last updated on November 10, 2022

The years 1975 and 1976 marked the significant evolution of free-enterprise labor rights for professional baseball players. These rights included salary contract freedom with the teams of their choice and their owners. During this period, courts also recognized the baseball players’ union and players’ legal rights concerning good-faith income bargaining.

Summary of Event

In 1975 and 1976, the “reserve clause” in Major League Baseball was legally challenged by two professional baseball players, Dave McNally of the Montreal Expos and Andy Messersmith of the Los Angeles Dodgers. The reserve clause was a provision in the baseball player’s contract that allowed the contract’s automatic extension for a year beyond its expiration, thus binding the player to the team until release, retirement, or trade to a different team. Baseball Sports;baseball Major League Baseball;reserve clause Seitz decision Reserve clause (baseball) [kw]Players Challenge Baseball’s Reserve Clause (1975-1976) [kw]Baseball’s Reserve Clause, Players Challenge (1975-1976) [kw]Reserve Clause, Players Challenge Baseball’s (1975-1976) Baseball Sports;baseball Major League Baseball;reserve clause Seitz decision Reserve clause (baseball) [g]North America;1975-1976: Players Challenge Baseball’s Reserve Clause[01820] [g]United States;1975-1976: Players Challenge Baseball’s Reserve Clause[01820] [c]Sports;1975-1976: Players Challenge Baseball’s Reserve Clause[01820] [c]Business and labor;1975-1976: Players Challenge Baseball’s Reserve Clause[01820] Messersmith, Andy McNally, Dave Seitz, Peter Miller, Marvin Gaherin, John Kuhn, Bowie Turner, Ted

McNally and Messersmith filed grievances with baseball commissioner Bowie Kuhn. The lawyer for the players’ union, the Major League Baseball Players Association, Major League Baseball Players Association Marvin Miller, was eager to test the legality of the reserve clause as it pertained to players’ recently acquired right to salary arbitration, which allowed a player and his team’s owner to settle disagreements over salary through an impartial arbitrator. The arbitrator would choose a fair amount based on the player’s ability and market value.

Miller had studied the results of the 1972 Curt Flood Flood, Curt lawsuit, in which the U.S. Supreme Court upheld the contractual reserve clause by a vote of five to three. Miller noted that in the Flood case, team owners’ lawyers had argued that the reserve clause question should be a collective bargaining issue, not a matter to be decided by the courts.

Three people were elected to the arbitration panel for the McNally-Messersmith case: Miller represented the players, John Gaherin represented the owners, and Peter Seitz served as an impartial arbitrator. The three panelists decided among themselves to let Seitz make the final decision. At the beginning, Seitz urged the players and the owners to negotiate a settlement. The owners’ side declined that request, and Seitz was left to decide. The main argument in the McNally-Messersmith case as Seitz saw it was that since those two players had not actually signed their previous year’s contract, the one-year renewal clause was not enforceable for the coming season. (Not signing a contract in order to defeat the renewal clause is commonly referred to as an “option year” situation.)

The owners disagreed with Seitz’s decision, believing that the language of the reserve clause perpetually renewed contracts for another year regardless of whether they contained a signature. The owners also argued that the reserve clause was necessary to maintain a competitive balance among all the teams, by preventing teams with wealthier owners and a wider spectator base from outbidding other teams and drawing the best players.

On December 23, 1975, Seitz issued a sixty-four-page ruling. He sided with the players in the case, agreeing with Miller’s interpretation that Section 10A of the players’ standard contract created conditions for an option year if a player did not sign the contract, and instead elected to play at the previous year’s salary (in order to qualify as a free agent in the coming year). Seitz’s ruling read: “The grievances of Messersmith and McNally are sustained. There is no contractual bond between these players and the Los Angeles and Montreal Expos respectively.”

As a result of the Seitz decision, McNally could not come to an agreement with his sole team of choice, the Montreal Expos, so he decided to retire. Messersmith signed a lucrative contract with the Atlanta Braves and owner Ted Turner.

Negotiations concerning free agency Free agency (baseball) and the reserve clause continued between players and owners until July, 1976, when both sides agreed that free agency would be granted to players with six years of major-league service. The team that lost its player would receive compensation in the form of a draft pick (in which professional teams select—or draft—the best young amateur or foreign players).

After the Seitz decision, the owners immediately fired Seitz as an arbitrator, and they filed an appeal in federal court. Commissioner Kuhn called the decision a “disaster for the great majority of the players, for the clubs and most of all for the fans. It is just inconceivable that after nearly one hundred years of developing this system for the overall good of the game, it should be obliterated this way.”

On February 4, 1976, federal judge John Oliver upheld Seitz’s decision in a U.S. district court in Missouri. Another appeal was turned down by a U.S. circuit court.

Significance

The arbitration decision by Peter Seitz in favor of free-agent status for Dave McNally and Andy Messersmith was binding, and it put an end to the reserve clause’s effect of binding a player to a particular team or owner for his entire career. In the two years following the decision, more than two hundred professional baseball players became free agents, a status that enabled them to negotiate higher salaries and, in some cases, sign with the team that bid the highest for their services.

Two previous U.S. Supreme Court decisions upheld the legality of the reserve clause in the standard player’s contract, but the McNally-Messersmith arbitration issue provided a new avenue for veteran players to become free agents, and to strive for their true market value in contract negotiations.

As players’ salaries increased to three times the wages of the average American worker, attendance at baseball games fluctuated in the next few years. Nevertheless, the continued growth of the national economy and increased coverage of sports on television guaranteed the wages of high-earning owners and players alike. The McNally-Messersmith case was a clear signal to commissioner Kuhn, to owners such as Ted Turner, and to their colleagues and successors that baseball players would have greater bargaining rights in the future. Baseball Sports;baseball Major League Baseball;reserve clause Seitz decision Reserve clause (baseball)

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Abrams, Roger I. Legal Bases: Baseball and the Law. Philadelphia: Temple University Press, 1998. An examination of the influences of labor and the law on professional baseball, with simple explanations.
  • citation-type="booksimple"

    xlink:type="simple">Helyar, John. Lords of the Realm. New York: Ballantine, 1995. A history of player-owner labor relations and the development of baseball as big business, including the cases of McNally and Messersmith.
  • citation-type="booksimple"

    xlink:type="simple">Korr, Charles P. The End of Baseball as We Knew It: The Players Union, 1960-1981. Urbana: University of Illinois Press, 2002. Historical examination of the Major League Baseball Players Association’s transition from a loose group of players to a powerful labor union that significantly changed professional baseball.
  • citation-type="booksimple"

    xlink:type="simple">Scott, R. Rosner, and Kenneth L. Shropshire. The Business of Sport. Sudbury, Mass.: Jones & Bartlett, 2004. Looks at the business side of major sports. Various authors submit chapters about economic influences on professional, Olympic, and college sports.
  • citation-type="booksimple"

    xlink:type="simple">Snyder, Brad. A Well-Paid Slave: Curt Flood’s Fight for Free Agency in Professional Sports. New York: Viking Press, 2006. A historical account of professional baseball player Curt Flood’s failed lawsuit against the owners of Major League Baseball.
  • citation-type="booksimple"

    xlink:type="simple">Zimbalist, Andrew. May the Best Team Win: Baseball Economics and Public Policy. Washington, D.C.: Brookings Institution, 2003. An economics professor examines the history and dynamics of the financial prosperity of professional baseball and how that affects its popularity and the prices paid by fans.

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