Introduction
The football transfer system, which governs the movement of players between clubs, is a cornerstone of the sport's global economy. Over the years, it has evolved from informal agreements to a highly regulated market, reflecting broader changes in football's professionalisation, commercialisation, and globalisation. This article traces the historical development of the football transfer system, examining key milestones and their implications for clubs, players, and the sport at large.
Early Beginnings: Amateurism and Informal Transfers
In the late 19th century, football was primarily an amateur sport. Transfers were informal and often based on personal connections or employment opportunities offered by clubs to attract players. Clubs operated within a community framework and player movements were not driven by financial incentives such as transfer fees.
At the time, many clubs were set up and funded by local factory owners, with the players coming from the factory workforce. Player movements were often presented under the guise of a job at the factory when the real reason was to play for the football team. The first professional footballers in English football, Fergus Suter and Jimmy Love, were both Scotsmen recruited by a factory owner who also owned Darwen FC, and both Suter and Love were ‘employed’ by the factory but were brought in to help the club win the FA Cup. This story was the foundation of the Netflix drama series The English Game.
At the time (I appreciate that this may be hard to believe these days, but Scotland was the true centre of innovation of the game and has been credited with creating the passing game we take for granted these days. As a result, an influx of Scottish players moved south with the promise of better wages and led the charge towards the professionalisation of the game.
The Introduction of Professionalism
The late 19th and early 20th centuries saw the professionalisation of football. In 1885, the English Football Association legalised professionalism after spending several years trying to fight the tide, allowing players to be paid for their services. This shift necessitated more structured transfer regulations.
The Football Association (FA) permitted professional players to participate in matches but were prohibited from becoming team captains or holding other influential positions within the sport. Additionally, the FA established a regulatory framework to oversee the transfer of professional players from one club to another. Players were required to re-register with their club annually and were not allowed to play for any other club except the one they were registered with. After each season, players were free to join a new club, even if their previous club did not wish to release them. However, players were not allowed to switch clubs during a season without the permission of the club holding their registration and the FA.
This system's limited freedom of movement prevented it from being an unlawful restraint of trade, becoming a fundamental part of the game's structure. After the English Football League (EFL) was founded in 1888, the League authorities introduced a new player registration scheme that likely involved more stringent and possibly unlawful restrictions on player movement.
Another significant factor in this development was the case of Radford v Campbell (1890), where Campbell, a Nottingham Forest player, decided to accept a contract to play for Blackburn Rovers, who were the country's top club at the time. At that time, Rovers were the most successful and prestigious club in the country, being founder members of the English League in 1888 (which Forest did not join until 1892) and winners of the F.A. Cup on five occasions between 1884 and 1891. Rovers had been paying their players long before the Football Association agreed to professionalism, and Campbell received the princely sum of £4 10s per week from them. Forest then sought an injunction to prevent Campbell from playing for Blackburn but had their application denied because Nottingham Forest had refused a transfer out of malice and also that the courts felt that sport should not be something that the courts have jurisdiction over.
The EFL introduced the ‘retain-and-transfer’ system in 1893, which allowed clubs to retain a player's registration, even after the expiry of their contract, effectively controlling their ability to move to another club unless a transfer fee was agreed upon. It applied even if the player's annual contract with the club holding their registration was not renewed after it expired. The club was not obliged to play them, and, without a contract, the player was not entitled to receive a salary. Nevertheless, if the club refused to release his registration, the player could not play for any other Football League club. Football League clubs soon began to demand and earn a transfer fee from any other Football League club as consideration for agreeing to release or transfer the player's registration.
This restricted clubs from luring players from other clubs such as in the example of Radford v Campbell, thereby preventing clubs from losing their players and preventing the league from being dominated by a handful of rich clubs. This system was designed to protect clubs' investments in players but faced criticism for restricting player mobility and rights.
The legality of the retain-and-transfer system was approved by the English courts in 1912 in the case of Kingaby v. Aston Villa Football Club. Herbert Kingaby had been the archetypal journeyman professional footballer. He had played for a London side, Clapton Orient, in the Southern League while holding down a full-time job which restricted his availability to matches played on Saturdays and on public holidays. In 1906, he was sold to Aston Villa for £300 and was paid the maximum wage of £4 a week.
Two months after the transfer, Villa had second thoughts on the player's ability and offered to sell him back to Clapton for £150. However, Clapton could not afford him, and no other club was interested in signing him. Aston Villa - one of the richest and, arguably, the most successful clubs in the country - was not willing to lose their £300 investment by allowing him to move without a fee. Kingaby's main obstacle to freedom of movement was the fact that the retain-and-transfer system allowed Villa to keep him on their retained players' list even though they had no intention of giving him a new contract after his one-year deal expired. Once he had been placed on Villa's retained list, he could not sign for another EFL club, but as he was no longer contracted to them, he was not receiving a salary. Faced once again with the immanent termination of his professional career, Kingaby sought legal redress against Aston Villa, contending the club's actions were an unlawful restraint of trade.
During the trial, the player's lawyer focused on Aston Villa's alleged wrongful use of the transfer system instead of addressing the law on restrictive practices. Kingaby’s lawyer primarily argued that the club had acted maliciously and used the retain-and-transfer system to hinder the player's career out of revenge. Essentially, the retain-and-transfer system was lawful, but Villa had used it maliciously. This was a major tactical error that potentially lost the case for Kingaby.
Since the legality of the retain-and-transfer system was not challenged, the motives of Aston Villa were considered irrelevant. Ultimately, the court ruled in favour of Aston Villa, as even malicious intentions could not render a lawful act unlawful. Therefore, there were no grounds to challenge either the "malicious" transfer fee or the transfer system itself as a breach of the player's employment contract.
This system seems an anathema in the current day and age but was reflective of the highly feudal and hierarchical nature of industrial relations throughout the first half of the 20th century.
The Post-War Era and the Transfer Fee System
After World War II, football experienced significant growth and commercialization. In 1961, the abolition of the maximum wage in English football led to increased competition for top players and higher transfer fees. The transfer fee system, where clubs pay a fee to acquire a player under contract with another club, became the standard mechanism for player transfers. This system aimed to compensate clubs for the loss of their players and maintain competitive balance.
However, in 1963, a man called George Eastham was to take a sledgehammer to the retain-and-transfer system. Eastham played for Newcastle United, and in April 1960, several times he asked Newcastle to release him from his contract without success. Discouraged, Eastham quit the game and took a job outside football, but in October 1961, the players’ union, the PFA, approached him with a view to his being a test case on the legality of retain-and-transfer. Eastham agreed, and even though Newcastle eventually granted him a transfer to Arsenal for a fee of £47,000 in November of that year, Eastham, like Kingaby, agreed to go ahead with the case.
Eastham’s case was heard in the High Court over the summer of 1963, and the court found in Eastham’s favour by ruling that the retain-and-transfer system was an unreasonable restraint of trade. This amounted to a scathing indictment of the retention element of the transfer system, which the judge regarded as going far beyond what was necessary to ensure clubs were able to protect their legitimate interests. This is perhaps best summed up by this section of the Court’s judgment:
“… The system is an employers' system, set up in an industry where the employers have succeeded in establishing a united monolithic front all over the world, and where it is clear that for the purpose of negotiation the employers are vastly more strongly organised than the employees. No doubt the employers all over the world consider this system to be a good system, but this does not prevent the court from considering whether it goes further than is reasonably necessary to protect their legitimate interest"
Eastham triggered the introduction of a new transfer system - one that abolished the 'retain' element but gave players in the English game greater freedom than they had enjoyed hitherto. Firstly, it became easier for a player to obtain a 'free transfer' at the end of his contract, for at the end of each season, clubs had to state which players would be placed on the transfer list but only on payment of a 'transfer fee.' Unwanted players who were not transfer-listed could seek a free transfer.
Eastham's most important achievement was changing how players in dispute with their clubs were handled. Under the new system, if a club wanted to re-sign a player who refused to sign a new contract, the dispute would be referred to an independent Transfer Tribunal for arbitration. This meant that the player would either receive a new contract with terms that suited them, or they would be granted a transfer to a different club. This new system put an end to clubs being able to force players to accept unfavourable terms or risk ending their careers.
The Bosman Ruling and Free Agency
A major turning point in the transfer system came with the Bosman ruling in 1995. Jean-Marc Bosman, a Belgian player, challenged the existing transfer rules after being denied a move to another club at the end of his contract by his previous club, demanding a transfer fee for Bosman, despite him being out of contract. Although the retain part of ‘retain-and-transfer’ was effectively abolished in the English leagues, it remained in full effect in the rest of Europe.
The ECJ found that the ‘retain’ element was an unjustifiable restriction on the free movement of persons, a central tenet of the EU Single Market. It ruled in favour of Bosman, allowing players over the age of 24 within the European Union to move freely to another club at the end of their contract without a transfer fee. This ruling shifted the balance of power towards players, leading to the concept of free agency and significantly impacting the transfer market.
Although the immediate effect of the Bosman case was to enable out-of-contract players to move clubs easily, and often on highly lucrative new contracts (since their new clubs would not have to pay transfer fees), clubs have since 1995 been able to retain control of players under ever-lengthening contracts, thereby fuelling the growth of transfer fees and continuing to limit the options of players still in contract.
The Modern Era: Commercialization and Mega Transfers
The late 20th and early 21st centuries have seen unprecedented commercialization and globalization of football. Television rights, sponsorship deals, and wealthy investors have poured vast sums of money into the sport, driving up transfer fees and player salaries. Record-breaking transfers, such as Neymar's €222 million move from Barcelona to Paris Saint-Germain in 2017, exemplify the era of mega transfers. These high-profile moves reflect top clubs' financial muscle and star players' global appeal.
The evolution of the transfer system has profound socio-economic implications. While top clubs and elite players benefit from lucrative transfers and salaries, smaller clubs and lower-league players often face financial challenges. The disparity between wealthy and less affluent clubs has widened, raising concerns about competitive balance in domestic leagues and European competitions.
The valuation of players’ transfer values is often little more than the metaphorical finger in the air and plucking the first figure that comes to mind, in the knowledge that there will often be a willing buyer. The fees paid by the richest clubs also have an inflationary effect on everyone else, and on many occasions, those clubs in the chasing pack will pay the fees to try and keep up. Whether there is a practical alternative to the current system is a question that many others with more intelligence than me have struggled to come up with. Tying transfer fees to the remaining salary to be paid on a player’s contract may be a way to bring down transfer fees, but whether that would push the inflationary impact onto wages remains to be evaluated.
Conclusion
The history of the football transfer system reflects the broader evolution of the sport, from its amateur roots to a global, multi-billion-dollar industry. Key milestones, such as the professionalisation of football, the introduction of the transfer fee system, the Bosman ruling, and the advent of Financial Fair Play, have shaped the current transfer market. As football continues to grow and evolve, the transfer system will undoubtedly face new challenges and reforms aimed at ensuring the sport's integrity, competitiveness, and financial stability. It has allowed players to have greater rights, and in principle, creates a more level playing field, and arguably tilted more in the favour of players than clubs.
Effectively, the fears of the FA and EFL back in the 1890s were extremely prescient, to say the least, when you look at the disparity between the top clubs and the rest of the league in terms of financial spending power and revenue generation. However, the primary benefits of the evolution of the modern-day transfer system appear to be greatly concentrated in the hands of the elite clubs, but this may be a genie that can never be put back in the bottle without legislation and transnational agreement.
References
1. Taylor, M. (2008). The Association Game: A History of British Football. Pearson Education.
2. Szymanski, S., & Kuypers, T. (1999). Winners and Losers: The Business Strategy of Football. Viking.
3. Morrow, S. (2003). The People’s Game?: Football, Finance, and Society. Palgrave Macmillan.
4. Gardiner, S., & Welch, R. (2011). Football, Law and Policy. Routledge.
5. FIFA. (2021). Regulations on the Status and Transfer of Players. FIFA.com.
6. UEFA. (2020). UEFA Club Licensing and Financial Fair Play Regulations. UEFA.com.
7. McArdle, D., One Hundred tears of Servitude: Contractual Conflict in English Professional Football before Bosman (2000)
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