Free agency (Major League Baseball)

Free agency in Major League Baseball (MLB) concerns professional athletes whose contracts with a team have expired and who are therefore eligible to sign with another team. Specifics are governed by a collective bargaining agreement (CBA) between MLB and its players' labor union, the Major League Baseball Players Association (MLBPA). Before the mid-1970s, professional baseball players could effectively be bound, in perpetuity, to the team holding their contract via a "reserve clause", thus preventing them from becoming free agents.

Free agency was very limited for most of the first century of organized baseball. Through the use of a reserve clause in player contracts, first instituted by the National League in 1879, the contractual rights to a player could be retained by a team even after the expiration of the player's contract. As long as the team renewed his contract annually (which the team could do unilaterally), the player had no ability to enter into a contract with a different team. The team with a player's contract rights could reassign, trade, or sell the player at will. A player would only become a free agent if he was released by his team, or if his team did not renew his contract. By preventing players from voluntarily moving between teams, the reserve clause kept salaries low; team owners claimed it prevented wealthy teams from hoarding the best players and ruining the competitive balance of baseball.

The reserve clause, along with baseball's exemption from the Sherman Antitrust Act (an exemption dating to the 1922 Supreme Court case Federal Baseball Club v. National League), was upheld in the 1953 Supreme Court case Toolson v. New York Yankees, Inc.

A notable challenge to the reserve clause was the 1972 Supreme Court case Flood v. Kuhn, with the plaintiff being outfielder Curt Flood and the defendant being Bowie Kuhn, the Commissioner of Baseball; the Supreme Court ruled against Flood.

In December 1974, pitcher Catfish Hunter won an arbitration hearing against the Oakland A's, initiated by a breach of contract dispute, making Hunter a free agent. Hunter subsequently signed a multi-million dollar contract with the New York Yankees. For his role in demonstrating what a highly sought-after player could be worth on the open market, Hunter has been "credited with ushering in the free-agent era."

In December 1975, an arbitration case between Major League Baseball (MLB) and the Major League Baseball Players Association (MLBPA) that challenged the reserve clause was decided in favor of two players, Andy Messersmith and Dave McNally. Known as the Seitz decision, it effectively ended the reserve clause in baseball: a player became a free agent after playing one season without signing a contract (the contract having been unilaterally renewed by the team); teams had previously been able to renew unsigned contracts annually, for as long as they wished to do so.

The specific language of the reserve clause, as quoted in the Supreme Court decision for Flood v. Kuhn, was:

10. (a) On or before January 15 (or if a Sunday, then the next preceding business day) of the year next following the last playing season covered by this contract, the Club may tender to the Player a contract for the term of that year by mailing the same to the Player at his address following his signature hereto, or if none be given, then at his last address of record with the Club. If prior to the March 1 next succeeding said January 15, the Player and the Club have not agreed upon the terms of such contract, then on or before 10 days after said March 1, the Club shall have the right by written notice to the Player at said address to renew this contract for the period of one year on the same terms, except that the amount payable to the Player shall be such as the club shall fix in said notice; provided, however, that said amount, if fixed by Major League Club, shall be an amount payable at a rate not less than 80% of the rate stipulated for the preceding year.