Sign in / Join

Principles of league structure

Aka the Sports Economist's Manifesto

If you could start from scratch, what sort of league would you design? Here's my list of seven core principles.

[1] The league must be organized such that any team could win a championship, not every year, but at some point over the long run. This perception must exist, and be well founded.

[2] People & towns who want to compete (hello Cleveland, hello LA) should have the opportunity to compete.

Update: by fielding a team, not by paying a king's ransom to current owners.

[3] Ambition and success should not be heavily taxed.

[4] Sloth and indifference must be penalized.

[5] Insuring that the first principle is met requires significant revenue sharing in a league with teams of widely differing profit potential (see the NFL). But extensive revenue sharing promotes sloth and indifference to winning (see the NFL, again), so it must be tempered.

[6] Addressing the problem of sloth and indifference is not difficult. It is a simple matter of fashioning the proper penalty. Teams that fail to perform up to standard -- say the bottom two or three teams in the league -- must be relegated to a lower division. This may seem harsh, but it is necessary to provide sufficient incentive to punish teams that would otherwise plan to simply collect the rents from being a member of the club (see Michael Lewis' rant in the current SI).

[7] The right way to determine who gets to compete is well approximated by the structure adopted by the PGA Tour. Players (teams) who perform well -- even well below average! -- stay in the top division. All others must compete to play in the top division. Success elsewhere, like in the Nationwide Tour in golf, is sufficient to climb the ladder into the top division. This can be achieved in league sports. Indeed it is the norm in the world's most popular sport (soccer).

Summary: Limited revenue sharing to promote balance, a trap door between divisions to ensure every firm tries hard, and promotion of the ambitious teams and towns. Not a monopoly, but a meritocracy.

You've made it this far? Ok then, please wheel me off to the looney bin.

Update: Comments have now been enabled (d'oh!), but Sports Law Blog and Always Right have posted critiques at their sites.