The clip is designed to grab onto the tiny grooves in the end of the spool to allow proper tensioning of your casting tension (mechanical brake). If this part does not work properly, it will be difficult to acheive preoper tension, resulting in poor casting distance and possible 'Birds Nests' in your line. The ears of the clip point towards the reel, not into the cap.
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Mikes had this hard-to-find clip for a very old reel. Shipping was fast and tracking was made easy with updates. Thanks!!!