After the home-and-away season (which lasted for seventeen matches, including the "first round" of fourteen matches and a "second round" of three matches), Collingwood was top of the ladder with a record of 15–2 and a percentage of 159.4; Fitzroy finished second with a record of 14–3 and a percentage of 171.6.
The finals were contested using the variation of the Argus System seen between 1902–1906. Fitzroy faced fourth-placed Geelong in the First Semi-Final, and won by 52 points, and Collingwood faced third-placed Carlton in the Second Semi-Final and won by four points. Collingwood and Fitzroy then faced off to decide the premiers.
The winner of this match would automatically win the premiership; no team had the right to challenge for the premiership this season. Under the variation of the Argus System in use between 1902–1906, the club with the best record in all matches (including finals) could have challenged for the premiership if it had not won this game. However, whichever team won this game would have become the team with the best record, depriving the other of any right to challenge. Entering the match, Collingwood had a record of 16–2, and Fitzroy had a record of 15–3 but a superior percentage: in the event of a Collingwood win, Collingwood's 17–2 record would have ranked above Fitzroy's 15–4; in the event of a Fitzroy win, both clubs would have been level on 16–3, and Fitzroy would have been ranked above Collingwood with a superior percentage.
This is different from the ruling which would have been used under the more widely known variation of the Argus System, which was in use from 1907–1930. In that variation, the team with the best record in matches excluding finals had the right to challenge; as Collingwood had the best record after 17 weeks, it would have retained the right to challenge, regardless of finals results.
Ross, J. (ed), 100 Years of Australian Football 1897-1996: The Complete Story of the AFL, All the Big Stories, All the Great Pictures, All the Champions, Every AFL Season Reported, Viking, (Ringwood), 1996. ISBN 0-670-86814-0