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.