The reserve clause, in North Americanprofessional sports, was part of a player contract which stated that the rights to players were retained by the team upon the contract's expiration. Players under these contracts were not free to enter into another contract with another team. Once signed to a contract, players could, at the team's whim, be reassigned, traded, sold, or released.
The only negotiating leverage of most players was to hold out at contract time and to refuse to play unless their conditions were met. Players were bound to negotiate a new contract to play another year for the same team or to ask to be released or traded. They had no freedom to change teams unless they were given an unconditional release. In the days of the reserve clause, that was the only way a player could be a free agent.
Once common in sports, the clause was abolished in baseball in 1975. The reserve clause system has, for the most part, been replaced by free agency.
In the late 19th century, baseball in America became popular enough that its major teams began to be businesses worth considerable amounts of money, and the players began to be paid sums that were well above the wages earned by common workers. To keep player salary demands in check, team owners promulgated a standardized contract for the players, in which the major variable was salary. The players unsuccessfully tried to fight the growing reserve system by forming a union, the Brotherhood, and founding their own Players' League in 1890, but the PL lasted just one season. For the next 80 years, the reserve system ruled the game. In this era, all player contracts were for one year. There were no long-term contracts as there are today, because the reserve clause negated the need for them.
The reserve clause's inception was in 1879, when it was proposed as a way to formalize an unofficial rule known as the "five man rule". It would allow teams to reserve players for each season, unless a player opted out of his contract and did not play in the league for a year. While the previous informal rule was not secret, teams had started to sign other teams' "reserved players", thus encroaching the rule. The resulting controversies caused the National League to instate the rule officially on December 6, 1879.[1]
Teams realized that if players were free to go from team to team then salaries would escalate dramatically. Therefore, they seldom granted players (at least valuable ones) a release, but retained their rights, or traded them to other teams for the rights to other players, or sold them outright for cash. Players thus had a choice only of signing for what their team offered them, or "holding out" (refusing to play, and therefore, not being paid).
Under the Sherman Antitrust Act of 1890, two or more non-affiliated companies in any other interstate business were prohibited from colluding with each other to fix prices or establish schedules or rates. Enforcement of the act reached its apotheosis in 1910 when the Supreme Court affirmed the government's order to dissolve the Standard Oil conglomerate.
However, under the reasoning that keeping baseball (the only large-scale professional sport in America during the 1920s) prosperous required granting it immunity from the Sherman Act, The United States Supreme Court had held in 1922 in Federal Baseball Club v. National League (259 U.S. 200) that baseball was an "amusement", and that organizing a schedule of games between independently owned and operated clubs operating in various states, and engaging in activities incidental thereto, did not constitute "interstate commerce" and therefore antitrust laws did not apply to such activity.
This pass on "trust-busting" essentially codified the legal legitimacy of the reserve clause for many years, and gave what came to be known as Major League Baseball unprecedented power over both players and the independent organizations of the National Association of Professional Baseball Leagues (NAPBL). MLB could dictate not only how and where professional players could move between major league clubs, but as they took the opportunity of the Great Depression to establish systems of farm teams of players wholly owned by the parent clubs placed on independent teams from the NA leagues around the country, they developed a way of expanding control of contracts of virtually the entire pool of professional baseball players.
When other team sports, particularly ice hockey, football, and basketball developed professional leagues, their owners essentially emulated baseball's reserve clause. This system stood largely unchallenged other than by the occasional holdout for many years.
In October 1969, St. Louis Cardinals outfielder Curt Flood unsuccessfully challenged his trade to the Philadelphia Phillies and sacrificed the remainder of his playing career to pursue this litigation.[6] In Flood v. Kuhn the Supreme Court established that the reserve clause was a legitimate basis for negotiation in collective bargaining between players and owners, and that the historic baseball antitrust exemption was valid for baseball only and not applicable to any other sport. Although the Court ruled in baseball's favor 5–3, it admitted the original grounds for the antitrust exemption were tenuous at best, that baseball was indeed interstate commerce for purposes of the act and the exemption was an "anomaly" it had explicitly refused to extend to other professional sports or entertainment.[7]
Removing the reserve clause from player contracts became the primary goal of negotiations between the Major League Baseball Players Association and the owners. The reserve clause was struck down in 1975 when arbitrator Peter Seitz ruled that since pitchers Andy Messersmith and Dave McNally had played for one season without a contract, they could become free agents. This decision essentially dismantled the reserve clause and opened the door to widespread free agency within North American professional baseball.
NFL
On June 18, 1921, the NFL ratified its first constitution.[8] The reserve clause ratified in the constitution was similar to that of baseball's at the time. The reserve clause stipulated that a team had the first opportunity to sign a player after the length of the contract had expired. If the team chose not to offer a contract, then the player could try to sign with a team of his choosing.[9] Theoretically, the reserve clause bound the player "...to his employer in perpetuity".[10] The reserve clause had been abolished in the NFL constitution in 1948 when the option clause was created.[11] The option clause stated that a team may choose to automatically keep a player on their team for another year, at the same pay, after his contract had expired.[12][13] The term, option clause, was not used by the print media and it was instead referred to as the reserve clause.[13] Nevertheless, in the NFL's attempt to gain antitrust exemption from Congress in 1957, Bert Bell still referred to the clause as the option clause (and also as the "option and reserve clause").[14]
Decades later, NFL players' mobility was limited by the so-called "Rozelle rule", named for the commissioner who first implemented it, which allowed the commissioner to "compensate" any team who lost a free agent to another team by taking something of equivalent value, usually draft picks, from the team that had signed the free agent and giving it to the team the player had left. Fear of losing several future high draft picks greatly limited free agency as no team wanted to sign a veteran player only to learn that it would lose, for example, its next two first-round draft picks. The Rozelle rule was eventually replaced by "plan B", which allowed a team to name a thirty-seven man roster the reserve clause would apply to, and all players not included on this list were free agents. Few top-echelon players were left off this thirty-seven man roster unless they happened to be injured. Judge Earl R. Larson declared that the rule was a violation of antitrust laws in Mackey v. National Football League on December 30, 1975,[15][16] and something resembling true free agency came to pro football. Now, exclusive rights to a player are only for the first three years after his selection in the college draft. At the end of the first three years, a player can be a "restricted free agent", allowing his former team to match any offer made to him by another. After four years in the NFL all contracts end with the player becoming an unrestricted free agent without reserve.
There is a franchise tag option that is similar to the reserve clause; however, teams can only tag one player each year, although they can tag the same player for consecutive years. Franchised players are eligible to receive at least 120% of their previous year's salary, and players tagged "non-exclusive" can accept offers from other teams; if the original team does not match the offer, they receive draft picks as compensation. In recent years, many teams have opted not to exercise their right to designate the franchise tag.
NBA
The National Basketball Association went through several phases of compensation and other arcane provisions before reaching almost unrestricted free agency. The first player in that league—and the first American major-league athlete—to challenge the reserve clause was Rick Barry. In 1969, he wanted to leave the San Francisco Warriors after his second season to play for the Oakland Oaks, who were coached by his father-in-law, Bruce Hale. After a court upheld it,[clarification needed] Barry sat out a season before joining the Oaks.[17]
NHL
The reserve clause was the basis for the NHL's injunction against the large number of players who had signed with the rival World Hockey Association in 1972, with all but one—against Chicago Black Hawks star Bobby Hull—ultimately thrown out by lower courts. The appellate court, however, sided strongly with the WHA and Hull, calling the NHL's business practices monopolistic, conspiratorial, and illegal. While the reserve clause was not explicitly struck down, the court did effectively block any further injunctions based on the reserve clause, rendering it useless. (The WHA, meanwhile, voted at its founding to abolish the reserve clause.) The end of the reserve clause in hockey remains a significant part of the WHA's legacy, as it ultimately resulted in the evolution of the NHL's modern free agency system.
The highly contentious negotiations between National Hockey League owners and players that led to a lockout, wiping out the entire 2004–05 NHL season, were in part about free agency; the previous system precluded unrestricted free agency before the player reached 31 years of age. Most younger hockey free agents were restricted free agents whose teams could retain them by matching an offer from another club or making a "qualifying offer", which usually consisted of a ten percent raise above the pay in the former contract. Following the 2004-05 lockout, owners eventually agreed to phase in a much lower age for unrestricted free agency (27 years of age or 7 years in the NHL, whichever comes first) in exchange for the players meeting owners' principal demand in the new NHL Collective Bargaining Agreement—an overall salary cap. Nevertheless, the league demanded the re-imposition of the 31-year-old threshold for free agency in the most recent lockout, but when union responded by threatening to disclaim interest and file antitrust suits against the league, the owners backed down.
Unlike the other four major leagues of North American professional sport, MLS still retains a reserve clause in every player's contract. For Major League Soccer, this was initially to prevent clubs from competing with each other for player contracts, an aspect of single-entity designed to protect it from antitrust lawsuits.[20] MLS is a single entity in which each team is owned and controlled by the league's investors.[21] The investor-operators control their teams as owners control teams in other leagues, and are commonly (but inaccurately) referred to as the team's owners.[22] In MLS's view of the global professional sports marketplace, internal bidding leads to increased costs. The league takes an additional step, imposing the reserve clause for players indefinitely, making player rights a commodity within the team structure for long after the player has left the league.[23]
See also
Retain and transfer system, a similar system that restricted player movement in professional association football in England
Major League Soccer (MLS) is a men's professional soccer league sanctioned by the United States Soccer Federation, which represents the sport's highest level in the United States. The league comprises 29 teams—26 in the United States and 3 in Canada—since the 2023 season. The league is headquartered in Midtown Manhattan.
The Federal League of Base Ball Clubs, known simply as the Federal League, was an American professional baseball league that played its first season as a minor league in 1913 and operated as a "third major league", in competition with the established National and American Leagues, from 1914 to 1915.
In professional sports, a free agent is a player who is eligible to sign with other clubs or franchises; i.e., not under contract to any specific team. The term is also used in reference to a player who is under contract at present but who is allowed to solicit offers from other teams. In some circumstances, the free agent's options are limited by league rules.
In professional sports, as opposed to amateur sports, participants receive payment for their performance. Professionalism in sport has come to the fore through a combination of developments. Mass media and increased leisure have brought larger audiences, so that sports organizations or teams can command large incomes. As a result, more sportspeople can afford to make sport their primary career, devoting the training time necessary to increase skills, physical condition, and experience to modern levels of achievement. This proficiency has also helped boost the popularity of sports. In most sports played professionally there are many more amateur than professional players, though amateurs and professionals do not usually compete.
Curtis Charles Flood Sr. was an American professional baseball player and activist. He was a center fielder who played 15 seasons in Major League Baseball for the Cincinnati Redlegs, St. Louis Cardinals, and Washington Senators.
The Major League Baseball Players Association (MLBPA) is the labor union representing all current Major League Baseball players. All players, managers, coaches, and athletic trainers who hold or have held a signed contract with a Major League club are eligible for membership in the Association.
In sports, a farm team, farm system, feeder team, feeder club, or nursery club is generally a team or club whose role is to provide experience and training for young players, with an agreement that any successful players can move on to a higher level at a given point, usually in an association with a major-level parent team. This system can be implemented in many ways, both formally and informally. It is not to be confused with a practice squad, which fulfills a similar developmental purpose but the players on the practice squad are members of the parent team.
Daniel Lewis Gardella was an American left fielder in Major League Baseball who played with the New York Giants (1944–45) and St. Louis Cardinals (1950). Born in New York City, he batted and threw left-handed. He is known as one of the handful of American Major League players who "jumped" their organized baseball teams to play in the "outlaw" Mexican League in 1946.
The Seitz decision was a ruling by arbitrator Peter Seitz (1905–1983) on December 23, 1975, which declared that Major League Baseball (MLB) players became free agents upon playing one year for their team without a contract, effectively nullifying baseball's reserve clause. The ruling was issued in regard to pitchers Andy Messersmith and Dave McNally.
Professional sports leagues are organized in numerous ways. The two most significant types are one that developed in Europe, characterized by a tiered structure using promotion and relegation in order to determine participation in a hierarchy of leagues or divisions, and a North American originated model characterized by its use of franchises, closed memberships, and minor leagues. Both these systems remain most common in their area of origin, although both systems are used worldwide.
Sports law in the United States overlaps substantially with labor law, contract law, competition or antitrust law, and tort law. Issues like defamation and privacy rights are also integral aspects of sports law. This area of law was established as a separate and important entity only a few decades ago, coinciding with the rise of player-agents and increased media scrutiny of sports law topics.
Major professional sports leagues in the United States and Canada traditionally include four leagues: Major League Baseball (MLB), the National Basketball Association (NBA), the National Football League (NFL), and the National Hockey League (NHL). Other prominent leagues include Major League Soccer (MLS) and the Canadian Football League (CFL).
Flood v. Kuhn, 407 U.S. 258 (1972), was a decision by the Supreme Court of the United States that preserved the reserve clause in Major League Baseball (MLB) players' contracts. By a 5–3 margin, the Court reaffirmed the antitrust exemption that had been granted to professional baseball in 1922 under Federal Baseball Club v. National League, and previously affirmed by Toolson v. New York Yankees, Inc. in 1953. While the majority believed that baseball's antitrust exemption was anomalous compared to other professional sports, it held that any changes to the exemption should be made through Congress and not the courts.
Toolson v. New York Yankees, 346 U.S. 356 (1953), is a United States Supreme Court case in which the Court upheld, 7–2, the antitrust exemption first granted to Major League Baseball (MLB) three decades earlier in Federal Baseball Club v. National League. It was also the first challenge to the reserve clause which prevented free agency, and one of the first cases heard and decided by the Warren Court.
Radovich v. National Football League (NFL), 352 U.S. 445 (1957), is a U.S. Supreme Court decision ruling that professional football, unlike professional baseball, was subject to antitrust laws. It was the third of three such cases heard by the Court in the 1950s involving the antitrust status of professional sports.
In professional sports within the United States and Canada, a trade is a sports league transaction between sports clubs involving the exchange of player rights from one team to another. Though player rights are the primary trading assets, draft picks and cash are other assets that may be supplemented to consummate a trade, either packaged alongside player rights to be transferred to another team, or as standalone assets in exchange for player rights and/or draft picks in return. Typically, trades are completed between two clubs, but there are instances where trades are consummated between three or more clubs.
The NHL salary cap is the total amount of money that National Hockey League (NHL) teams are allowed to pay their players. It is a "hard" salary cap, meaning there are no exemptions.
The NFL collective bargaining agreement (CBA) is a labor agreement which reflects the results of collective bargaining negotiations between the National Football League Players Association (NFLPA) and National Football League (NFL). The labor agreement classifies distribution of league revenues, sets health and safety standards and establishes benefits, including pensions and medical benefits, for all players in the NFL. The first collective bargaining agreement was reached in 1968 after player members of the NFLPA voted to go on strike to increase salaries, pensions and benefits for all players in the league. Later negotiations of the collective bargaining agreement called for injury grievances, a guaranteed percentage of revenues for players, an expansion of free agency and other issues impacting the business of the NFL. The NFLPA and team owners have negotiated seven different agreements since 1968.
Professional sports leagues in the United States include several major leagues as well as other professional and semi-professional leagues.
Free agency in Major League Baseball (MLB) concerns players whose contracts with a team have expired and who are therefore eligible to sign with another team. Free agents may be eligible for pendulum arbitration, also called "salary arbitration" or just "arbitration" in baseball circles.
↑ Fraser v. Major League Soccer,01F.3d1296(US 1st Cir.March 20, 2002)("MLS owns all of the teams that play in the league (a total of 12 prior to the start of 2002), as well as all intellectual property rights, tickets, supplied equipment, and broadcast rights. … However, MLS has also relinquished some control over team operations to certain investors. MLS contracts with these investors to operate…the league's teams").
Algeo, Matthew (2006), Last Team Standing. Philadelphia: Da Capo Press. ISBN978-0-306-81472-3
Lyons, Robert S. (2010). On Any Given Sunday, A Life of Bert Bell. Philadelphia: Temple University Press. ISBN978-1-59213-731-2
Ruck, Rob; with Paterson, Maggie Jones and Weber, Michael P. (2010) Rooney:a Sporting Life. Lincoln: University of Nebraska Press. ISBN978-0-8032-2283-0
Willis, Chris (2010). The Man Who Built the National Football League:Joe F. Carr. Lanham, Maryland: Scarecrow Press, Inc. ISBN978-0-8108-7669-9
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