5 June: A concern about dramatic rise in transfer fees

On 5 June 1922 an interview with Arsenal chairman, Sir Henry Norris, appeared in the prestigious football journal, Athletic News. A key theme in the interview was the question of transfer fees which were once more on the rise.  It was an appropriate time to hold such a debate since the summer of 1922 was a summer dominated by questions of money, both inside and outside of football.

In the pre-war era transfer fees had been rising inexorably until the record for the era was achieved in February 1914.  That was a fee of £2500 for the transfer of Percy Dawson from Hearts to Blackburn Rovers.

In the first major post-war transfer, David Mercer went from Hull to Sheffield United for £4500, an increase in the record of 80%.  By March 1922 the record had risen to £5500 as Warney Cresswell went from South Shields to Sunderland.

This was a time when the government saw football as a source of revenue, particularly as the Entertainment Tax had been introduced in 1916.  It was set at either 25% or 50% of the cost of entering a football match.

However, transfer fees were not taxed as such being considered to be allowable expenditure.  In other words, in a very simple model, a club might have an income of £10,000, and spend £9000 on salaries and transfer fees.  It had thus clearly made £1000 profit, and would pay tax on that £1000.

This was an encouragement to pay higher transfer fees to reduce the profit of successful clubs and reduce the losses of the less successful clubs.  However, Sir Henry appeared to feel the government was likely to change this rule and was also likely to argue that transfer fees could not be counted as expenditure and thus would be taxable.

Sir Henry also wanted to end the maximum wage that players could receive.  He expressed in the Athletic News interview his determination to try and push his point of view once more at the League’s AGM next time around.  He also voted in the House of Commons on 20 June to keep Entertainment Tax, but only in certain circumstances – circumstances which effectively would remove it from being payable on the cost of entrance to a football match!

Unfortunately, his desire to give footballers a fair wage, recognising the shortness of their career came to nothing as other clubs opposed this, and the maximum wage lasted until 18 January 1961 when it was finally deemed illegal.

Henry Norris at the Arsenal:  There is a full index to the series here.

Arsenal in the 1930s: The most comprehensive series on the decade ever

Arsenal in the 1970s: Every match and every intrigue reviewed in detail.

100 Years: 100 Years in the First Division

Arsenal today: Untold Arsenal 

Leave a Reply

Your email address will not be published.