What is "reserve clause"

n. a clause that used to be part of the contract with a professional athlete extending the contract for a year beyond its expiration; "the reserve clause was used to bind players to a particular ball club"

In North American professional sports, the reserve clause was part of a player contract that stated upon the contract's expiration, the rights to the player were to be retained by the team. This meant the player was not free to enter into another contract with another team. Once signed to a contract, a player could be reassigned, traded, sold, or released at the team's whim. The only negotiating leverage that most players had was to hold out at contract time, refusing to play unless their conditions were met. The player was bound to either negotiate a new contract to play another year for the same team, or ask to be released or traded. The player had no freedom to change teams unless he was given his unconditional release. In the days of the reserve clause, this was the only way a player could be a free agent.

Once common in sports, the clause was abolished in baseball in 1975. The reserve clause system has, for the most part, been replaced by free agency.