The end of the baseball reserve clause came to major league baseball players as an early Christmas gift on December 23, 1975, when arbitrator Peter Seitz ruled that two players, Andy Messersmith and Dave McNally, were eligible to negotiate contracts with any team. Prior to this time, major league players were bound under the reserve clause, a provision of a player’s contract which provided that the team that he signed with had first claim to his services for the term of the contract. Such control was usually extended in subsequent years of the player’s career. The signing team also controlled any trades that might involve the player. A team could release a player from his contract, which would then make him free to contract with any other team that might be interested in having him play. The reserve clause was not completely one-sided; a player could break it by refusing to sign and then not signing with another team for a year, after which he would be free to sign with a new team. Usually this meant that the individual would not play, and as most players were dependent upon their team salaries this was an option that few could exercise.
There had been previous attempts to break the reserve clause system. The most famous being the organization of the Federal League, an eight team league, which was in business from 1913 to 1915. The Federal League did not use the reserve clause in its contracts so salaries were considerably higher than what a player could earn in the “major leagues.”
The Federal League went out of business in 1916, but in an attempt to collect damages as a result of harm suffered by the National League’s noncompetitive practices, it sued under the provisions of the Sherman Anti-Trust Act. The case ultimately ended up at the US Supreme Court in 1922. In the court’s decision, Federal Baseball Club of Baltimore v. National League, Justice Holmes ruled that major league baseball was not engaged in interstate commerce, and thus not subject to the provisions of the Sherman Act.
Although the reserve clause helped to hold down the salaries of players, some players were rewarded for outstanding performance by incentive provisions in their annual contracts. The 1921 contract for Babe Ruth, an admittedly exceptional player, contained a clause that paid him fifty dollars for each home run hit during the regular season.
After 1922, the issue of baseball’s anti-trust exemption would be raised from time to time, including a famous hearing in 1958 when Casey Stengel verbally tied the Senate Subcommittee on Anti-trust and Monopolies in knots. However, the reserve clause issue would not finally be resolved until fifty years after the decision in Federal Baseball Club. After the 1969 season, the St. Louis Cardinals traded Curt Flood and three other players to the Philadelphia Phillies. Flood had been in the major leagues for 14 years and had just recently won his seventh golden glove award for outstanding defensive play, but the management of the Cardinals, after a disappointing season, wished to reorganize. Flood did not want to go to Philadelphia since he had established roots in St. Louis and he felt he would not be welcomed at the new club. He also felt that after 14 years of play he should not be traded without his consent. When he was not able to get any satisfaction from major league baseball he decided to hire a lawyer and sue. Flood lost his case at both the trial and appellate levels. On appeal at the Supreme Court he was represented by former Associate Justice Arthur Goldberg, who was arguing before the court for the first time since his resignation from the bench in 1965. Justice Blackman, in the decision for the court, upheld the lower courts’ decisions and reaffirmed the validity of the rule of Federal Baseball Club.
Flood would sit out of baseball for the remainder of the 1970 season to return briefly in 1971 as a member of the Washington Senators. His legacy, the year after his death, would be honored by Congress when in 1998 it passed, and President Clinton signed, the Curt Flood Act, which established that major league baseball was subject to the anti-trust laws.
So how did we get to Messersmith and McNally breaking the reserve clause just three years after the courts had ruled against Flood? Due to contract disputes that arose during spring training in 1975, Andy Messersmith played the year without a contract. Dave McNally also started and finished the season without a contract. Both players then sought arbitration to become free agents. Seitzer’s decision granted this status. Messersmith would sign with the Atlanta Braves where he would play for two seasons before leaving for the New York Yankees in 1978. He retired in 1979 after returning to the Dodgers. McNally retired without playing a single game as a free agent.
Meanwhile, in 1974, Jim “Catfish” Hunter signed a two year contract with the Oakland Athletics that stipulated that the team would allocate a portion of his salary to buy an annuity which would pay Hunter in installments at a later date. The management of the Athletics defaulted on the contract when they neglected to purchase the annuity. Hunter exercised the right in his contract to terminate his contract. Prior attempts by players to exercise this standard clause had failed, but in this instance the arbitrator upheld Hunter’s position and he was declared a free agent. In early 1975, Hunter signed with the New York Yankees where, beginning in 1976, he would help the team win three straight American League pennants and two World Series championships. Hunter’s new found freedom, and his pitching skills, inspired Bob Dylan to write “Catfish,” a ballad which was later recorded by Joe Cocker. Full free agency began before the start of the 1977 season when stars such as Reggie Jackson and Mike Schmidt were signed to multi-year multi-million dollar contracts.
For more information about baseball in America visit the Library’s exhibit, Baseball Americana.