The History of the Football Transfer System Explained

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.

96 thoughts on “The History of the Football Transfer System Explained

  1. Great video talking about the history of transfers. Seems like they get discussed every single day in the news.
    Perhaps a less talked about topic for video purposes would be positional play?

  2. Bielsa studies your current players, the players you plan to buy next season, and your cooking staff.

  3. I hate how players sign big time contracts only to want out for a year. I understand you wanna get paid but don’t try to break your contract and still get paid.

  4. Wow. Very informative. I figured the Bosman ruling had to be there, but I had no idea about the rest of the legislative changes that came before it.
    Brilliantly written.

  5. What were the rules about foreign players on the starting line up, before the Bosman law was applied? I read about the 3+2 rule on a forum but wasn't very clear.

  6. Would Brexit have any implications for the transfer system within the British leagues? For example, limits on the number players born outside the league's nation, or the reversing of the Bosman ruling, if Britain could rewrite their laws?

  7. So what’s the deal about the club where the players grew up?
    How do these small clubs get compensated when their former player is bought by bigger clubs for large amounts of money.

  8. So mbappè can switch to madrid if he want too but only if real Madrid reach an agreement price with psg?what if psg dont wanna sold how could he force his way out??

  9. I find it crazy that rules had to be made to allow players to basically not sign a new contract once it expired. Surely once a contract is over, they were always under no obligations to sign a new one.

  10. And now look at it: overpaid prima donnas who couldn't give any less of a shit about the club or fans, and greedy vampire agents sucking as much as they can out of the sport. I wish the Premier League could put a cap on salaries again and keep more of the money for the development of the game, and not for something new to show on fucking Instagram for these mercenaries.

    I say let the most expensive players play elsewhere. Let's have British leagues filled with those who want to play and will work for the shirt and not demand a new contract every week.

  11. Since you brought up the Neymar transfer, I would’ve assumed you’d talk about the origins of buyout clauses, especially in Spain. I’d be interested in learning more about how those came about.

  12. I have a question though- in the case where players are acquired by activating their buyout clause (like in the case of Neymar), does the player have the right of refusal to transfer? To what extent does the decision by current club or player to leave or stay affect the completion of the transfer?

  13. Many people slate City's spending but look at City's transfer policy now. Example United want £105m rated João Felix and are willing to pay his release clause, against City's signings roughly same price market value Leroy Sane £37m, Bernardo Silva £43m, Gabriel Jesus £27m total £107m.

  14. Very creative writing. I suggest you could do a video about Piast Gliwice, the sensational new champion of Poland. A similar story to Leicester when the team was fighting for relegation just a year previous. Love your channel and keep up the good work. ?

  15. Cristiano Ronaldo transfer from Manchester utd to Real Madrid is the best in history 80M is not a lot these days

  16. My brain got so twisted by the layout of the newspaper @ 0:22 ?‍♂️?‍♂️?‍♂️. Great video as usual. Cheers!

  17. Has it ever been the case that a club could transfer a player without him having requested a transfer, or him having agreed a pre-transfer deal with the new club?

    By way of example – Imagine a scene amongst the dark satanic mills of Yorkshire in 1927.: Bradford City tell their star player: "Eh-o Sonny Jim, them at 'uddersfield offa wee umpteen o' brass for you, so pack thy bags, son, Thas off teur t' gurt city. Thas on thy own for brass. Av fun i' 'uddersfield"

    and the player's like : "Thas jokin! Theur daft dingy! Thas orl a'' sixes'n'sevens! Ah won't doa it.

    and the chairman says "Tough jouce, sonny jim – that's 'a we doa things i' 1920's Yorksha!"

    So he toddles off to Huddersfield town (unfortunately Herbert Chapman has left but they are still a top side) and has to negotiate with their chairman, who is an even more stereotypical 1920's Yorkshire man, for a wage.

    "Ah wor earnin 30 bob eur week a' Bradf'd, sa ahl tek t' sem ta laik for theur."

    "30 bob? luxury! when ah wor young ah used ta li' i' shoobox i' middle o' ruwad….."

    "don' be takin' uz for a croggy down the ginnie"

    "Lad, where there's muck there's brass"

    "Ah reckon nowt ter that, sir"

    "Quit yer mithering – tha'll get a clip rahnd lug'oil! Ahm gettin' right mardy w' thee"

    "Aye, does thee av t' contract? Wang it o'er. Can ah av extreur brass for scorin goals?"

    "If tha's 'ad beef dripping for dinner tha's not 'avin' a chippy tea. Besides, thas t' goalie"

    "That's a threp in't steans, bain't it? Still, theear theur av it." (signs contract for 2 quid a week)

    "Eeh by gum! I'm 'appy as a pig in mook. I'm chuffed t'bits , that's right champion, lad. Put wood in 'ole on thy waoy oot"

    Chairman (to himself). Ay, it's true. There's nowt as queer a folk.

  18. Arsenal fan here

    I feel like crying whenever the transfer window opens…coz we know we ain't buying shit with that profit seeking penny pinching bastard named Stan Kroenke ??

  19. I think a salary cap should be in place for clubs in certain leagues that the balance of power in leagues such as Bundesliga and Ligue 1 can spread the talent out and be more competitive overall lessening the need for a Super League in the future.

    Also off topic but im gonna say it: Cristiano Ronaldo shouldve stayed in Manchester. And plenty of other stars like that should stay with the original top clubs that gave them a chance to shine. I strongly dislike when superstar footballers leave their clubs to just create super teams. We get enough of that over here in American sports I dont need my football to be tainted as well!

  20. Hey Tifo, I never made a request before but can u please speak about how some clubs have monopoly of the importing of players from developing countries.

  21. I dont see how neymar deal is a disrespect to this system

    He could hav gone to PSG for free but he signed which had a RC that was 2 times the current transfer record then left….
    hows that disrespectful?

  22. Great upload! Let me know if you're considering doing a video about scholarships for Universities in USA and NCAA rules.

  23. Isn’t the neymar deal a separate point to the one you’re trying to insinuate? He had a release clause in his contract, which compelled Barca to accept the bid and enabled Neymar to make the ultimate choice as to whether he stayed or left. Barca set this buyout fee, surely on the basis that they deemed that to be an appropriate value for his services. How is that Neymar having too much power?

  24. Remember Man City got caught paying there players too much and were fined and Man Utd took all there better players for next to nothing. Was a looong time ago but, City being caught doing naughty financial things is rather topical.

  25. Who needs college classes when we have you guys!! Also u need to go in deeper in the transfer fees. I want to know how the buyout clause came about.

  26. A brief History of Max Allegri please! Juventus just let go a great manager, who never gets the credit he deserves, and it doesn't look like there will be many big clubs looking for a new manager. It will be a interesting summer for him.

    Any guesses where he ends up?

  27. Great video AGAIN Tifo! Was wondering if you’d do a video on how the Mexican national team never performs when it comes to the World Cup. Otherwise known as the “5th game” curse in Mexico! Cheers.

  28. Please do a video analysis on the effects of a possible salary cap in the PL at some point. it works great in the NFL and it promotes parody while forcing teams to develop their own talent first and foremost while only singing FA players to fill in the gaps.

  29. Interesting how many cite the Bosman ruling as 'the end of football". Yes it hurts clubs who are less monied, but it vastly improves player rights in what is an already short career. I think it was a necessary change

  30. Should do a detailed profile of Jimmy Hill, is there a part of football as we know it today he didn't touch, what was discussed here, 3 points for a win, the modern pundit, abolition of maximum wage and success as a manager too

  31. Currently there is too much power on the player side. It all depends on player being honest. Check the Robin Van Persie and his Fenerbahce deal. Besides the injury, he literally didnt bother to play. He didnt run, he didnt put an efford, he lied about being injured; He told the team that he has pain and injury and cant play, literally 2 days later in national team, he was performing bicycle kicks and giving interviews he is ready to be starting 11. Clubs not able to do anything even with such a disgraceful situation without paying huge amounts of money is just wrong.

  32. I'd argue the power has shifted to the agents rather than the players. Those are the ones pulling the strings.

  33. Whatever people think of the post Bosman era, it sounds very dodgy that you couldn't just walk away after your contract expired

  34. I'm loving the cameos of the 1987 title Winning Everton kit and old 1930's Everton badge .

  35. You should make a video about the "pele law" that made ease to players leave braziliam clubs and brought a larger lost of talent to the national league.

  36. Can you do a video on how colonialism has effected football? Like Brazilian players frequently going to Portugal, Hispanic players in Spain, many black English players having Nigerian/ Jamaican roots and Frances World Cup team? Thanks

  37. The Italian transfer system would be a very interesting video. With the now abolished co-ownership of players…

  38. It's gotten out of hand with all of the ridiculous fees and wages in football these days. Why is it people that don't really do anything super important get paid so much? Meanwhile people that like, firefighters, policemen, and soldiers get paid so little in comparison… These people in these professions can die at anytime and deserve to get paid more than people who can kick a ball into a net. It's sad really.

  39. This is sad. In the Mexican league they were still using the old system until like a year or two ago. Only recently did they allow players to leave for free, granted that only applied within the league itself.

  40. can you please make a video on borussia dortmund finances ? it's so intresting as their mercato always is .

  41. Neymars transfer has really fucked up the prices big time.. average player's going for £60m it's madness…

  42. You could have mentioned that pretty much all transfers are paid in installments, this explains how teams get around financial fair play rules by spreading out payments over several financial years. It also explains why Sunderland were still shelling out 7 million quid for Lamina Kone 3 years after they 'bought' him…..while in League One 🙂

  43. All it will take is 1 player to challenge the Transfer Window (under restriction of movement) and they'll drop it in a flash

  44. Why are players so adamant on increasing their wage deals when they already earn so much? Case in point: Pogba, Sanchez etc

  45. In North American sports they mostly do trades where the whole contract gets traded and the player has no choice but to go unless they put a no trade clause in their contract or had been with the current team for 5 years

  46. Hi Tifo,can u make a video on scouting devolopement of manchester united as i have doubt of their obligations and role on thier jobs.

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