Transfers have become an integral part of
the entertainment product that football is today. The excitement over the movement of
players used to fill the back pages in the summer when domestic football had a break.
Now, transfer gossip columns are updated on a daily basis. While we are familiar with
the processes that lead to a transfer today, the
system has taken many different forms over the last century and a half.
The evolution of the system can be best characterised as a tug of war between the clubs
and the players over who has the bargaining power when it comes to transfers. The
momentum has shifted from side to side but now seems to have come to rest with the
players, as illustrated two years ago by Neymar’s decision to move from Barcelona to PSG
against the wish of his former club. The origins of the transfer system can be
traced back to the 1880s, before being a football player was a legal profession. Despite clubs
paying players being illegal, numerous instances of ‘under the counter’ payments
were made by club owners to entice the best players. Owners did not chase profitability,
but ‘utility maximisation’, or, in other words,
success on the playing field. This is one of the overarching differences between the
American sporting model – designed to protect the financial stability of a sports club by
avoiding the threat of relegation – and the European model, forever chasing sporting glory
despite financial losses. Because of this phenomenon, before 1885 the
players held the bargaining power. As there were no professional contracts, the best players
were effectively mercenaries for hire, able to move wherever they wanted, whenever
they wanted. The FA, realising the negative effect ‘club-hopping’ was having
on the integrity of their competition, decided to
take action. The result was the professionalisation of football in 1885, which required all
professional players to be registered with the FA. This birthed the ‘retain and transfer’
system, with clubs feeling that they deserved to be compensated for losing the
registration (and playing ability) of a particular player.
The key difference between this system and the transfer market today is that players
were unable to move for free when their contract expired. The clubs had the bargaining
power and could decide to ‘retain’ the player’s registration and offer him a contract
(usually a one year deal) at least as good as his expiring deal, or wait for another
club to offer a transfer fee deemed suitable to buy
out the player’s registration. In terms of
sporting integrity, this legislative change halted ‘club-hopping’ and was designed
to benefit the smaller clubs who could keep their
better players or receive hefty compensation in return. There were also maximum
and minimum salary caps to control player wages and protect clubs’ financial
stability. The pendulum of power was now firmly on the
side of the clubs, in the battle of bargaining control between the players and
their employers. The system effectively allowed the clubs to hold a monopoly over
the players’ registration, with any transfer requiring the approval of both the regulatory
body – the FA – and the club holding the player’s registration. That being said,
owners were still fanatically obsessed with chasing
footballing glory, which meant that the maximum wage cap was often illegally broken by
club directors desperate to entice and reward the biggest talents.
The Players Union, now known as the Professional Footballers’ Association, had a bitter
relationship with the Football League during the 1900s, threatening strikes and
campaigning which had the minimal effect of a steady, slow increase of the maximum
wage. There was no surprise when top quality players like John Charles and Jimmy
Greaves went abroad in the 1950s, lured by superior pay.
The 1960s, famous for its hippy culture and freedom movements, saw the first real change
in direction for the pendulum. The first impactful instance was the Ministry of Labour’s
abolition of the maximum wage in English football in 1961, following the threat of more
strike action from the PFA. This gave players more bargaining power in terms of pitting
clubs against each other for the highest wage offer. It also meant that players were able
to put themselves on the transfer list if they rejected the terms of their employing
club’s new contract, whilst, crucially, still being
paid during the player’s search for a new club.
The second tide-turning moment occurred in 1963. George Eastham requested a transfer
from Newcastle United in 1959 and, after the club refused, Eastham decided not to sign
the ‘retaining’ contract offered. With the help of the PFA and its chairman, Jimmy
Hill, Eastham finally got his move to Arsenal in
1960 after a publicity war. The PFA pushed the
case to court for further amendments to the ‘retain and transfer’ system. Judge
Wilberforce ruled in favour of Eastham and the football authorities were forced to rejig
the system so that players reaching the end of their contract could leave on a free
transfer if the employing club failed to offer a new contract at least as favourable as the
expiring deal. Clubs still held the majority of influence
when it came to transfers and contracts, but players could now be paid more than ever and,
if not offered a continuous or upgraded contract, were free to move without being
held hostage for a suitable transfer fee. After more PFA campaigning, 1977 saw ‘freedom
of contract’ introduced, where a player (having fulfilled his contractual obligations)
was free to make the best deal he could with any club offering terms. The club holding
the player’s registration was entitled to a
compensation fee if they offered a new contract which was at least as favourable as the
last. A Tribunal System was also establish to fix a transfer price if the holding club
and bidding club could not agree on a deal.
The pendulum seemed more central than it had ever been before, with both the players
and clubs enjoying a certain amount of bargaining power. The next revelation, however,
blew the doors off the ‘retain and transfer’ system, enabling the modern transfer market
to be born; the last barrier being the necessity for a transfer fee despite a player’s
contract expiring. Outside of football, the European Union signed
the Maastricht Treaty in 1992 which allowed the freedom of labour movement across
the continent. This set the stage for Jean-Marc Bosman to change football seismically.
In 1990, RC Liege (Bosman’s then club) offered him a contract with a reduced salary,
from 120,000 francs to 30,000. Dunkerque, a
French club, offered Bosman 100,000 francs. RC Liege denied Bosman the transfer over
concerns that Dunkerque could not afford his transfer fee. Bosman took RC Liege, the
Belgian FA and UEFA to the European Court of Justice on the grounds that they had
unlawfully restricted his labour market mobility which was against article 39 of the
European Treaty. Bosman won.
The aftermath laid the groundwork for the transfer system as it is today. Foreign player
quotas within UEFA competitions were dismantled and a complete freedom of contract for
players moving between countries within the EU was established. Players were no longer
held hostage by the ‘registration buy-out’ transfer fees when their contract expired.
As a result, wages started to inflate due to increased
player bargaining power, European football leagues drastically increased in
diversity and clubs started offering longer-term contracts (three/four/five years being the
norm) in the hope of wrestling some control back. Transfer fees were no longer related
to a player’s registration, instead being a
method of buying a player out of his contract with his employing club.
There is no doubt that the bargaining pendulum of power has done a full swing and
nestled itself comfortably with the players. The clearest indication of this is the rise
in prominence of agents. Agents, unsurprisingly,
are better at negotiating complicated financial documents than football players,
and so it became essential for players to hire
agents to protect themselves from clubs who were desperate to take advantage of their
new, unprivileged position. The balance of power is now at a delicate
stage. With clubs having lost much of their previous vice-like grip, there is more of
an ‘unwritten rule’ of respect between players
and owners. Players willingly sign longer contracts so that clubs can extract a fee
if they move on in the future, and clubs will generally
allow players to move if they express the desire for pastures new. Certain cases like
the Neymar deal, however, threaten the respectful relationship and could set in motion
further legislative changes in the future.

The History of the Football Transfer System Explained

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