History of Labor Struggles in MLB: The End of the Reserve System

photo: Joe Torre, Marvin Miller and Dick Moss

The Cardinal Nation’s series highlighting the history of labor struggles in MLB continues with successful union action to challenge the reserve clause, leading to the owners’ threat of… a lockout. The author is Marilyn Green, a retired attorney with background in employment law. (free)

Major League Baseball’s 1970 Basic Agreement expired on December 31, 1972.  As outlined in Part 7 of this series, that agreement contained a provision allowing for player grievances not related to the integrity of the game to be decided by an impartial arbitrator.  As negotiations began for a new Basic Agreement, the litigation instituted by Curt Flood opened the eyes of the public to the unfairness of the reserve system.  The union was growing stronger in the confidence of the players that change would come if they stuck together and held fast to their principals.

Following the Supreme Court decision in Flood vs Kuhn, MLB Players Association Executive Director Miller sought another avenue to force a decision on the issue of free agency for players.  Joe Torre brought his Cardinal teammate Ted Simmons to the attention of Miller as a candidate to test the reserve clause.

Ted Simmons

In his rookie season in 1971, Simmons had performed so well the team shifted Torre to third base in order to play Simmons as the full-time catcher.  Simmons was offered a salary increase that he considered to be too low in view of his performance.  Simmons was permitted to begin the 1972 season unsigned, while the Cardinals considered whether to up their offer.  Under pressure from MLB legal counsel eager to avoid another reserve clause suit, the Cardinals offered Simmons $30,000 for 1972, $5,000 less than he demanded, but the club added a second year at $45,000.  Simmons accepted and Miller’s test case was lost.

Negotiations toward a new Basic Agreement began that fall, with a strong sense that some of the more moderate owners were willing to come to an agreement to avoid a full-throated assault on the reserve clause.  These owners broached the idea of alternatives that would give players options to increase their salary and at some point in their career move on to another team.  Still other owners held fast to making no compromise, as they were confident the courts would continue to see things their way.

Executive Director Miller broached the subject of the reserve clause in the negotiations with a proposal that would allow lower salary players with three -to-five years of service, and veteran players with seven, 12, and 17 years regardless of salary, to be eligible to become free agents.  Owners however wanted only another “study” of the matter.  Sensing no movement on free agency was going to happen, Miller offered independent salary arbitration as an alternative.

Bowie Kuhn

The owners mulled over the idea for several months, then came back in early February 1973 with an offer to allow salary arbitration for players with 3+ years of service, but only every other year.  After a several more weeks of negotiations, the owners agreed to salary arbitration for all players with two or more years of service.

A new Basic Agreement was announced on February 25 and was ratified by the union three days later. It was for a three-year period to expire on December 31, 1975.  The principals for the league were Commissioner Bowie Kuhn, lead negotiator John Gaherin, and Milwaukee owner Ed Fitzgerald.  For the union, they were Miller, MLBPA lawyer Dick Moss, and player representatives Reggie Jackson and Brooks Robinson.

The provisions of the Agreement were:

  • Minimum salary increased to $15,000 for 1973-74, and $16,000 for 1975.
  • Salary arbitration for players with two or more years of service time, with no limit on number of times. Arbitrators to decide based on either figure submitted by player or club; no “splitting the difference” allowed.
  • Tender deadline moved to December 20.
  • “Ten and Five Rule” instituted. Players with 10 or more years of service time and 5 years with one club have right to veto trades.
  • A player with 5 years of service time may not be sent to minors without his consent.
  • Pay cut limitation from prior CBA remains.
  • World Series share increased from $15,000 to $20,000.
  • Increase in spring training stipend and meal money.
  • Increase in owner contribution to pension to $6.15 million in 1973-74 and $6.45 million in 1975.
Charles O, Finley

Miller continued to seek a player test for the reserve clause.  In the offseason of 1974-75, the first player to be declared a free agent came about – not due to a challenge to the reserve clause, but to a contract breach.  Athletics pitcher Catfish Hunter had a two-year contract that stipulated he was to be paid half his salary in the form of an insurance annuity payment.  Owner Charlie Finley failed to make the agreed-to payment as agreed to, and when efforts to force him to comply failed, the union filed a grievance on behalf of Hunter.  On December 13, 1974, a three-person arbitration panel voted 2-1 to void Hunter’s contract and declare him a free agent.  Finley appealed but the appeal was denied.

When the 1975 season began, nine players were still unsigned to a contract.  That number was reduced to two by mid-season.  Dodgers pitcher Andy Messersmith was seeking a multi-year contract with a trade approval clause, but the negotiations had not been going well when the season began.  The contract talks continued to stall throughout the season with the club refusing to go beyond a one year commitment.  At the end of the season, the Dodgers relented and offered a multi-year deal but without a no trade clause under pressure from league negotiator Gaherin.  The Dodgers refused to relent on the no trade clause with the support of NL President Chub Feeney and a majority of the league’s labor committee.

Miller saw the opportunity there to take the dispute to arbitration, but he felt he needed a second player on board.  Montreal pitcher Dave McNally was the other player to go unsigned through the 1975 season, but he had been planning on retiring.  Miller, knowing bad blood remained between McNally and Expos owner John McHale, contacted McNally, who agreed to come on board.

Andy Messersmith and Dave McNally (Baseball Hall of Fame)

Hearing that McNally was back in the mix, Gaherin pleaded with McHale to sign McNally.  After the formal notice of grievance was filed, McHale flew to Montana to see McNally.  McHale offered McNally a $125,000 contract with a $25,000 nonrefundable signing bonus to basically remain in the organization until the start of the 1976 season. McNally refused.

Knowing that McNally still planned to retire, the league sought an injunction in federal court to prevent McNally from being part of the litigation.  The injunction was denied.  McHale and Commissioner Kuhn next attempted to remove lead arbitrator Peter Seitz, who had been part of the 2-1 decision in the Catfish Hunter case.  Seitz had already been assigned to the panel for the Messersmith grievance, so any attempt to fire him at this point was of dubious legality.  A majority of the league labor committee voted against the idea.  Kuhn also considered taking the case away from arbitration altogether under a twisted interpretation of the “best interests of baseball” clause of the Basic Agreement.  Lead negotiator Gaherin talked Kuhn out of it.

The arbitration hearings began in late November and lasted three days.  The basis of the grievance was that the reserve clause, section 10 (a) of the Uniform Player’s contract, stated that the club could only renew an unsigned player for a period of one year under the same terms.  Miller had always interpreted this language literally, that the renewal was for a single year and no longer.  The league’s interpretation was that once the contract was renewed, the “option year” was renewed again, making it perpetual.

The league’s interpretation had the backing of longstanding tradition and history, including the understanding of players. The players had known no other interpretation existed until Miller came along to challenge the status quo.

The league used this longstanding tradition and history to argue at the hearing that a different interpretation of section 10 (a) would cause irreparable harm to baseball.  The clause, the league counsel argued, should not be interpreted in isolation from 100 years of practice and policies.

Peter Seitz

After the hearings concluded, Seitz sent a letter to both sides urging them to consider negotiating an acceptable solution before the ruling.  Miller was willing to negotiate, but only up to the start of spring training.  Gaherin urged the owners to negotiate but was rebuffed.  Gaherin informed Seitz of the league’s decision and on December 23, 1975, the three-person arbitration panel issued a 2-1 decision granting free agency to both Messersmith and McNally.  The decision stated that section 10 (a) limited clubs to a single renewal year and no more.  Because both Messersmith and McNally had played their renewal year unsigned, they were now free to sign elsewhere.

The ink on the decision was barely dry before the league fired Seitz.  The league appealed to the same federal judge, John Oliver, who had denied their injunction against McNally.  The union hired a local labor attorney named Donald Fehr to handle the appeal in Oliver’s court in Kansas City.  On February 4, 1976, Oliver upheld the arbitration decision, and the Eighth Circuit Court of Appeals followed suit a month later.

The reserve clause finally died a much deserved and too-long-in-coming death.  But more issues were on the horizon.  The Basic Agreement expired on December 31, 1975, and with the appeal of the Seitz decision still pending, an angry league had signaled their intent to lock the players out of spring training.

To be continued…

Prior articles in this series

History of Labor Struggles in Major League Baseball: The Early Years

History of Labor Struggles in MLB: The Rise of the AL and Road to Antitrust Exemption

History of Labor Struggles in MLB: The Supreme Court and Baseball’s Antitrust Exemption

History of Labor Struggles in MLB: Post World War II

History of Labor Struggles in MLB: The MLBPA and Marvin Miller

History of Labor Struggles in MLB: The First Collective Bargaining Agreement

History of Labor Struggles in MLB: The Fight for Free Agency

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