JOURNAL OF SPORTS ECONOMICS / May 2001Eckard / THE ORIGIN OF THE RESERVE CLAUSE The Origin of the Reserve Clause Owner Collusion Versus “Public Interest”

This article examines the creation of the first professional athletic labor market restriction over a century ago. In 1879, professional baseball club owners mutually agreed that each could reserve five players whom the others would not sign without permission, justi-fying the action by claiming that it was in the “public interest, ” that is, necessary to pre-serve the game in the face of various alleged problems. Analysis of the relevant data reveals that these problems were either nonexistent or easily solved within the game’s existing rule structure. Given the lack of support for the public interest arguments proffered by owners, the more likely motive for the reserve rule was monopsonistic collusion. The “peculiar economics ” of sports leagues (Neale, 1964) derive from the requirement that clubs at once cooperate and compete. League members must work together to develop playing schedules, design uniform playing rules, provide impartial referees and umpires, honor player contracts, and manage various other aspects of producing the athletic competition demanded by consumers. At the same time, however, teams must be fiercely independent and competitive on the playing field because any hint of “cooperation ” regarding the outcomes of games is anath