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Free agency: The root of modern labor strife

By , - Last modified: November 16, 2012 at 9:01 AM

With three major sports leagues suffering through lockouts recently, I can't help but often recall the process responsible for the foundation of modern free agency. Free agency meant an open market for players, with fewer or no restrictions, the primary effect of which is more players moving around to make more money.

From 1879 to the late 1970s, Major League Baseball players were subject to the "reserve clause" in a standard player contract. This essentially meant that teams owned the right for a player to play for them, like property. Players couldn't voluntarily leave their teams, they could only be traded. It also meant that they received only one contract offer. They either took the offer and played or were forced to sit out.

This was a rule very common in pro sports at the time, originating from when they were just nascent businesses growing out of organized clubs. In the late 19th and early 20th centuries, there wasn't much of a market for pro sports stars. They were making 10 or 50 times the wages of a blue-collar worker for playing a game in a league with much less exposure and market power.

There wasn't much of a reason to fight for more money. Many clubs at the time were so financially fragile, there just wasn't more money to be given.

This is why, in 1922, the U.S. Supreme Court ruled that baseball was just an "amusement," not an organized business, and therefore was not considered interstate commerce. This gave baseball a critical shield, because it was now free from antitrust regulations. Owners could do as they pleased without being regulated like any other business. They got a free pass on collusion just 12 years after Standard Oil was ordered dissolved for doing the same thing.

At the time, no one imagined the economic potential of pro sports. By the late 1960s, however, MLB was up to 24 franchises and was spreading all over the country. Games could be seen on television now. Stars were household names across the country.

All of this benefit went to the league. Willie Mays made $130,000 in 1966 and was the highest paid player at the time. That's $841,000 in today's dollars. And that was only 30 percent more than Joe DiMaggio was making 17 years earlier, in a much different scenario. Players were starting to grumble louder, demanding more and talking of organizing.

After the 1969 season, the Cardinals traded three-time All-Star outfielder Curt Flood to the Phillies as part of a six player deal. Flood refused to go. He didn't technically have a contract at all at the time, but he could only play for the Phillies. The Phillies had offered him a contract but he didn't want to take it and thought he should be able to consider deals from other clubs.

When baseball commissioner Bowie Kuhn refused his request for free agency, Flood brought suit.

Flood v. Kuhn made it all the way to the U.S. Supreme Court. While the court didn't rule in his favor, it did say that baseball was interstate commerce and the courts would not protect baseball as immune to antitrust regulations. Flood was receiving threats from people who believed he was destroying the sport.

Finally, by 1976, an arbitration decision created true free agency in baseball. The owners employed the arbitrator in that case, and he was fired the very next day. Owners have never gotten over their lost monopoly and seem to take it a little too personally.

Maybe I just want my hockey back.

Bill Sayer is a financial analyst in the insurance industry and holds a degree in economics. A native of upstate New York, Bill enjoys watching college football, the NFL, NHL and Premier League soccer from his home in Palmyra. Have a suggestion, link or question?

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