Reserve clause
The reserve clause, in North American professional 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 discretion, 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 The reserve clause system has, for the most part, been replaced by free agency.
NFL[edit]
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[edit]
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. Barry sat out a season before joining the Oaks.[17]
NHL[edit]
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.
Major League Soccer[edit]
Major League Soccer (MLS) is a professional soccer league representing the sport's highest level in both the United States and Canada.[18] MLS constitutes one of the major professional sports leagues of the United States and Canada.[19]
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]