The Seitz decision was a ruling by arbitratorPeter 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 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. That 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 automatically 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 Major League Baseball Players Association filed notices of grievance on behalf of both players on October 7, 1975. Eventually hearings were held on November 21, 24 and December 1, 1975 before an Arbitration Panel composed of MLB Player Relations Committee chief negotiator John Gaherin, MLBPA Executive DirectorMarvin Miller and Seitz, the Chairman and Impartial Arbitrator agreed upon by both opposing parties. Seitz ruled in favor of Messersmith and McNally on December 23, 1975, declaring: Seitz's Opinion further stated: In essence, the players were free to bargain with other teams because organized baseball could maintain a player's services for only one year after expiration of the previous contract. According to Gaherin, Seitz indicated soon after he heard arguments from both sides that he was leaning toward ruling for the players. 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. 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.
