In July of 1972, NHL president Clarence Campbell was giving testimony before the U.S. Senate, who were considering new regulations for professional sports. In particular, he was there to give testimony on what the owners considered crucial to good business: the reserve clause in player contracts.
The reserve clause was standard in professional sports contracts, and tied a player to a team for his career. It was also illegal.
“Bobby Hull agrees to play for the Black Hawks next year on the same terms as this year's contract except for the salary, which is to be negotiated” meant that although the contract expired after the year, Bobby Hull had already given the Blackhawks his future playing rights. The contract expired, Hull didn't have to play for the Hawks, the Hawks no longer had to pay him, but he was not free to sign with another team.
The owners loved the reserve clause, as it kept salaries low and, therefore, put more money in their pockets. During the Original Six era, the clause was also a way to intimidate players. With a limited number of jobs available in the league, many players weren't willing to rock the boat and risk their job by attempting to negotiate major pay raises.
When Campbell appeared before the Senate, he argued for the continuation of the reserve clause based on the fact that NHL teams supported a feeder system of junior and minor pro teams. If a player came up through those ranks, all the while the property of the Leafs (for example), and then said “Thanks for the training, but I'm going to go play for the Red Wings now,” then the Leafs would be out of their investment with no compensation. If this happened on a regular basis, the NHL teams would have no incentive to support these farm teams, so owner reasoning went.
In truth, support of these feeder systems wasn't necessarily a major investment for the teams. When an NHL team took one of their players in the first two rounds of the draft, the junior team received $3,000, plus another $4,000 when the player signed his pro contract. That's hardly a major investment. The NHL team could make the money back many times over at the gate, all while paying the players $10,000-$20,000.
Fed up with poor treatment by the Black Hawks, Bobby Hull agreed to sign with the Winnipeg Jets of the nascent World Hockey Association. Several other players followed suit, and the NHL did everything they could to stop
the WHA.
The NHL filed lawsuits in twelve different cities, asserting the WHA and players were violating the reserve clause. The problem was, they were arrogant and sloppy. Eleven of the suits were thrown out, and the twelfth, in Chicago, was lost but reversed on appeal. (The assumption and accusation there is that the original just was a Wirtz associate, and so it was fixed in the NHL's favour.) All were dismissed on the same grounds: the reserve clause was not legally binding.
By stating “We'll pay you this much this year but, we'll negotiate next year's salary” in the contract, the teams voided the contract. There's no provision in contract law for “we'll iron out that part when we get there,” yet the NHL had gotten away with it for years and profited from it. They assumed the courts would be pro-business and let them get on with business as usual.
Although the reserve clause had been dismissed as the basis for the NHL's lawsuits and player injunctions, the WHA decided to take it one step further: they filed an anti-trust lawsuit against the NHL in Philadelphia.
The NHL had 12 lawyers to argue their case. They then proceeded to file for continuances and argue amongst themselves. Judge Leo Higginbotham was unimpressed by the motions for continuance, and found for the WHA.
And just like that, players everywhere were free to negotiate higher salaries, sign with other teams, or jump to the WHA. The era of free agency was born.
Jennifer Conway is on twitter as @NHLhistorygirl and writer on her site: NHLHistorygirl.com. She is a historian, multi-purpose nerd, and librarian. ◉