Master Cylinder problem

Hi, I've recently bought a 78 Yamaha XS250 and the rear disc brake doesn't work at all. I've got the master cylinder off and and given it a few pumps and can hear and feel air going through the hose but when I put fluid in the reservoir and give it a pump it stays in the reservoir and doesn't go into the hose. Can anyone tell me if this is a symptom that the seals need replacing or or a just a clog in the system somewhere?

Thanks, Ryan