Romano On Sports: Sports Litigation Alert

The NCAA’s One-Year Renewable Athletic Scholarship – The Modern Reserve Clause

By Robert J. Romano, founding partner of The Romano Sports & Entertainment Agency

The NCAA’s mandate that all athletic scholarships be one-year renewable awards is analogous, in theory, to baseball’s historic reserve clause. The development of baseball’s reserve system occurred in the late 1800s and early 1900s, when the owners in both the National League of Professional Baseball Clubs and The American Association of Baseball Clubs entered into the “national agreement” that proscribed a uniform player contract. Under its terms, once a baseball player’s contract expired, the club and only the club and not the player, could unilaterally renew it for another season. This allowed a team to “reserve” the rights of a player season after seasons, or in other words, in perpetuity. Under the reserve rule, a player was bound permanently to the club who signed him first.

The “national agreement” also allowed a team to “reserve” a player’s rights without interference from other teams looking to poach a player, or a player looking to competing teams for a more lucrative contract. When the contract expired, all Major League teams colluded, agreeing not to make an offer for another team’s player. Each player could only negotiate with one club, a monopsony in economic terms.[1] A player who was offered an unsatisfactory contract had no power or leverage to solicit offers from a competing team. The only options the player had were to sign to the terms dictated by his current club, or retire. Under the reserve system, “cartel rules” controlled the movement of players.[2]

Today, college athletes under scholarship with an NCAA member institution are in an economic situation similar to baseball players during the period of the reserve clause. This is because since 1973, NCAA’s rules mandate that athletic scholarships be awarded for no more than one academic year, renewable at the discretion of the member institution.[3]This rule mandate is comparable to the reserve system wherein a key provision in the uniform player contract was that when it expired, the team, and only the team, retained the option to renew the contract for another season. The player had no right, similar to a college athlete, to compel an organization to allow him to play another season.

Additionally, each student-athlete, as a requirement to attend and play athletics for a college or university, is required to sign the National Letter of Intent (NLI). This NLI commits the student-athlete to the school for a full four years, while also making it difficult, if not impossible, to transfer schools without penalty. This is again similar to the reserve system wherein a player, in order to play professional baseball, was compelled to sign the contract prescribed by the league, or abandon baseball as a profession. The absolute lack of mutuality, both in obligation and in remedy, in the NLI makes it necessary for the student-athlete to either sign such as it is prescribed, or not play college athletics at all. What the student-athlete faces, as baseball players did previously, is a “Hobson’s Choice – whether you will “[4]

The college or university, however, has the right to revoke the scholarship at any time for serious misconduct, voluntary withdrawal from a sport for personal reasons, or if the athlete is rendered ineligible.[5] Additionally, a student-athlete who is injured, ill, does not play well, is replaced by a better or incoming recruit, one who simply does not fit the scheme because of a coaching change, or because of a “bad attitude,” may be released from the team and his or her scholarship revoked without cause.[6] The college’s only obligations are to notify the athlete of the nonrenewal decision and of the athlete’s right to appeal.[7]

The similarities between the student-athlete who signs a NLI and a baseball player who signed a contract that included a reserve clause, is without question. Under the reserve system, an owner or coach of the organization had the right to terminate the player’s contract at any time with 10 days’ notice. An owner could terminate the contract for any reason: player injury, diminishing player skills, or just because they have a “bad attitude.” If the player was terminated, he had no recourse, except now he may be allowed to play for a different club.

Under the terms of the “national agreement,” for each contract a player signed that contained a reserve clause, Major League Baseball was able “to perpetuate its control over the services of the player.”[8] Similarly, the reason the NCAA eliminated the four-year athletic scholarship and mandated that schools only give scholarships on a one-year renewable basis is so that the NCAA and its member schools could expand their control over the student-athlete. With the end of the guaranteed four-year scholarship, control in college sports shifted dramatically to athletic departments and coaches, and away from the athlete.

Over the years, social commentators have struggled to find the proper analogy for the current collusive market for college athletes. Civil Rights historian, Taylor Branch, commented that the NCAA has “an unmistakable whiff of the plantation” since it is easy to see inequity in the level of control that a school exerts over its athletes and the unequal division of the value of their labor.[9] However, economic competition is the great protector of the disadvantaged. History teaches us that the defenders of the reserve clause and college sports, beneficiaries of unjust systems, have great skill in developing rhetoric to defend their injustice. But history also teaches us that if there is economic competition, there is economic justice.

[1] Paul C. Weiler, et al, Sports and the Law, 128 (Thompson Reuters, 4th ed. 2011).

[2] Id.

[3] NCAA 2011-2012, NCAA Division I Manual art. 15.2.1-3 at 196-198.


[5] NCAA 2011-2012, NCAA Division I Manual art. at 204.

[6] NCAA 2011-2012, NCAA Division I Manual art. at 205.

[7] NCAA 2011-2012, NCAA Division I Manual art. at 205.

[8] American League Baseball Club of Chicago v. Chase, 149 N.Y.S. 6 (SCNY 1914).

[9] Taylor Branch, The Shame of College Sports, (Atlantic Magazine Oct. 2011).