Reserve clause

A reserve clause is a clause formerly found on North American professional contracts that stated that upon the expiration of the player's contract, the rights to the player were retained by the team to which he had been signed, unless the team agreed to release or trade its rights to another team. It meant that players couldn't become free agents unless their team agreed for them to become so, and had to either sign a new contract with their team, either request to be traded or released. It also meant that if another team was interested in a player whose contract had expired, it had to give a compensation to the right holders.

The reserve clause lost its value in the 1970's, when the rival World Hockey Association firmly refused to implement it and refused to recognize the National Hockey League's reserve clauses and signed numerous players who were not free of NHL rights, much to the protest of the NHL. A Philadelphia district court decision however ruled in favor of the WHA in November 1972, stating that the NHL couldn't bind players to its teams via the reserve clause. This decision put an end to the NHL's monopoly on all major league professional talents.