Seitz Decision

The Seitz decision was a ruling by arbitrator Peter Seitz on December 23, 1975 which declared that Major League Baseball players became free agents upon playing one year for their team without a contract, effectively nullifying baseball's reserve clause. The ruling was issued in regard to pitchers Andy Messersmith and Dave McNally.

Since the 1880s, baseball owners had included a paragraph described as the reserve clause in every player contract. The paragraph as written allowed teams to renew a contract for a period of one year following the end of a signed contract. Owners asserted, and players assumed, that this contract language effectively meant that a player could be "reserved," by a ballclub's unilateral contract renewal, year after year in perpetuity by the team that had signed the player. This eliminated all market competition and kept salaries relatively low.

In 1975, Messersmith of the Los Angeles Dodgers and McNally of the Montreal Expos had had their 1974 contracts renewed by their teams on the basis of this reserve clause. Since neither signed a contract during that option year, both insisted that they were free to sign with other teams the following season. The owners disagreed, arguing that under the reserve clause the one-year contracts were perpetually renewed.

The two players submitted the grievance to arbitration, and Seitz later issued his ruling that Messersmith and McNally were free to bargain with other teams because organized baseball could only maintain a player's services for one year after expiration of the previous contract.

MLB appealed the decision to the United States district court for Western Missouri, but Seitz's ruling was upheld on February 3, 1976 by Judge John Watkins Oliver, and later by the 8th Circuit Court of Appeals.Kansas City Royals Baseball Corp. v. Major League Baseball Players Ass'n, 409 F. Supp. 233, 261 (W.D. Mo. 1976) aff'd, 532 F.2d 615 (8th Cir. 1976) After all appeals were exhausted, Major League Baseball and the Major League Baseball Players Association signed a new agreement in 1976 allowing players with six years experience to become free agents.