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Posted: Thursday January 14, 2010 11:46AM; Updated: Thursday January 14, 2010 12:15PM
Sky Andrecheck

The case for the reserve clause

Story Highlights

The reserve clause binding each player to one team for life was abolished in 1975

It could be adjusted to meet present-day needs for fans, owners and players

Players would be free agents every year and have to earn their contract

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Curt Flood and Marvin Miller
Curt Flood (left) unsuccessfully challenged the reserve clause in 1970, but Marvin Miller helped overturn it five years later.

Forty years ago this Saturday, Curt Flood set in motion events which would alter the landscape of professional sports forever, filing a lawsuit against commissioner Bowie Kuhn and Major League Baseball over violations of anti-trust law. At the crux of the lawsuit was MLB's long-standing reserve clause, which allowed teams to perpetually keep players under contract.

While Flood didn't win the case (the Supreme Court upheld the clause, citing past precedent), his suit set in motion the downfall of the reserve clause system and the rise of free agency. After arbitrator Peter Seitz struck down the reserve clause in 1975, Players Association head Marvin Miller hammered out an agreement with the major league owners, and developed a blueprint for the modern free-agency system.

Miller set up a tiered system under which players were allowed to become free agents after six years in the major leagues. Those who had played for more than three years were allowed to have their contract disputes settled by an independent arbitrator, while players in their first three years would remain completely under team control. It wasn't long before other sports followed baseball's lead and service-based free agency became the norm.

Miller's service-based system was a landmark in sports history, but was it a good one? If we redesigned the system from scratch, would it make sense to replicate it? While Miller's system of compensation is so familiar and intuitive to us today, the rationale behind it is a bit puzzling. In a factory or a plant, a worker's wage that increases with years of service may be appropriate. But does this system make sense in baseball? After all, baseball, unlike a factory, is a workplace in which the value of workers' productivity varies tremendously. Some workers are immensely productive for their employers, while many others are not. Shouldn't this productivity be rewarded, regardless of how long a player has been in the league?

In 2008 the AL MVP was Dustin Pedroia. Stunningly, the most valuable player in the league made just $457,000. Meanwhile, his teammate Manny Ramirez, a player of comparable value, hauled in $20 million. The difference of course, was that Ramirez was in his 15th year in the majors, while Pedroia was in his second. Still, you would be hard-pressed to find a workplace in which one laborer was paid 40 times more than another for doing similar work. Miller's job was to compensate players fairly for their performance, but does his system really do the job?

Certainly Miller righted a major wrong, in that the players were not getting a fair share of the revenues from major league owners. Winning games is extraordinarily important to a team's bottom line, and it's only fair that the players who provide those wins should benefit. But while the Players Association may earn its fair share as a whole, the individual market is still highly unbalanced.

Of course, Miller would argue that players "pay their dues" when they are young, and reap the rewards later in their careers when they become free agents. Still, in a sport fraught with injury and unpredictable performance, this can easily lead to serious inequities. Take, for example, former Cubs phenom Mark Prior, who, not including his draft bonus, made just $13 million for 657 innings of outstanding pitching (3.51 ERA). Thirteen million bucks is nothing to sneeze at, but, given the game's economic markers, it's hardly proportional to his value. Meanwhile, Carlos Silva, who has had a much less valuable career than Prior's (five career Wins Above Replacement for Silva vs. 13 for Prior) made nearly that amount just last year! The difference? Silva had the good fortune to have a great year just before he hit free agency, and hit the jackpot with a four-year, $48 million contract, while Prior broke down before he could cash in.

This problem of inequitable salaries could have been avoided had Miller negotiated to make all players free agents, instead of just those with six years of service. (A's owner Charlie O. Finley actually advocated this position, but the other owners refused to listen to him.) While making all players free agents might distribute salaries more evenly, having all players become free agents each year would have a detrimental effect on the game. Fans' attachment to their favorite players and teams is the life blood of baseball, and when players are constantly changing squads, that bond becomes weakened. As one might expect, turnover among veteran players has spiked dramatically during the age of free agency. Opening up all players to free agency would only exacerbate the problem. It would also allow big-market teams such as the Yankees to snatch up small-market stars even sooner, likely having a detrimental effect on the competitive balance of the game.

No, having all players become free agents isn't the answer at all. Still, the current system doesn't seem like an ideal setup either. So what would be better? Ironically, a return to the reserve clause system could be the best for all parties.

Of course, that will never happen. But there was a lot to like about the old system. For one, big-market clubs were prevented from simply buying all the best players -- without free agency, teams were forced to grow their own players and could keep their core talent together. Two, there was more team continuity from year to year, and star players were far more likely to stay with their clubs for the entirety of the careers -- a big plus for the fans, the owners, and the players (who I suspect would much rather become a local hero for the team they came up with than go from team to team as a hired gun). The big problem with the original reserve clause, of course, was that the players were vastly underpaid. However, baseball could easily solve this problem by agreeing to collectively pay the Players Association a certain percentage of MLB revenues. The NFL and NBA already essentially do this, so there is no reason that it couldn't be done in baseball as well.

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