In a decision announced on December 23, 1975, arbitrator Peter Seitz ruled that pitchers Dave McNally and Andy Messersmith were free agents because the reserve clause could not bind them to a team forever. David McNally actually retired after the 1975 season and never played baseball again while Messersmith became a free agent and signed a three-year deal with the Atlanta Braves for a grand total of $1 million that included a $400,000 signing bonus.
Several court appeals were rejected, forcing the owners into collective bargaining on the issue. Take a moment to read “The Demise of the Reserve Clause” by Stew Thornley.
Baseball-reference.com write-up on the reserve clause