Professional sports league organization

Professional sports leagues are organized in numerous ways. The two most significant types are a European model, characterised by a tiered structure using promotion and relegation to determine participation in a hierarchy of leagues or divisions and a North American model characterized by its use of franchises and closed membership.

Etymology
The term league has many different meanings in different areas around the world, and its use for different concepts can make comparisons confusing. Usually a league is a group of teams that play each other during the season. It is also often used for the name of the governing body that oversees the league, as in Major League Baseball or England's Football League. Because most European soccer clubs participate in different competitions during a season, regular-season home-and-away games are often referred to as league games and the others as non-league games, even though the separate competitions may be organised by the same governing body. Also, there is a rugby football code called rugby league, as distinct from rugby union.

Structure of North American leagues
Professional sports leagues in North America are limited to a fixed number of teams, sometimes called "franchises." In this system, sometimes called a "franchise system" in the U.K., only a vote of the existing franchises can admit more teams. When this is done, a new place is put up to bid among would-be owners. With a few exceptions, no second team is allowed in an area where a team already exists. This system of league organization was first developed in Major League Baseball with the formation of the National League in 1876, and was later adopted by the other North American sports leagues.

Although member teams are separate corporate entities from the league, they operate only under the auspices of the league. This doesn't necessarily mean American franchises can't play against teams outside their league. Exceptions include NHL teams playing against European hockey teams, as well as NBA teams playing against European basketball teams and Major League Soccer teams playing against other soccer teams in their region, during regional tournaments. The league, rather than any other sporting organization, determines the rules of the sport and sets the conditions under which players join and change teams. However, this is beginning to change with various American leagues, thanks to the global exposure that these leagues are facing with the rest of the world right now. For example, Major League Soccer used to follow its own gameplay rules prior to 2004, when they decided to embrace the standardized international rules that FIFA and the rest of the world were playing. Similarly, as of October 2010, NBA gameplay laws are now homogeneous/universal to international basketball laws of the game (as led by FIBA, international governing body / organization for that sport). Also, it makes it easier for people to watch different leagues of the same sport, since the rules are universal everywhere, as well as the fact it also makes it easier for players of the same sport to transfer between different leagues, be it domestically or internationally. This is not a necessity more than it is a formal understanding between the various leagues and sports bodies. Since North American professional teams are so closely tied to their leagues, and, in the case of the four major team sports, clearly represent the top level of play in the world, teams almost never play games outside of their league.

The teams are organised so that each major city has a team to support. Only the largest cities have more than one team. As such the teams are often referred to as franchises. Even though they are not technically franchises in a business sense, the league is organised in a way that assures teams continued existence in the league from year to year, which fosters an ongoing connection with the team's supporters. On occasion a league may decide to grow the sport by admitting a new expansion team into the league. Most of the teams in the four major North American pro sports leagues were created as part of a planned league expansion or through the merger of a rival league. Only the few oldest teams in the National Hockey League, for example, existed before becoming part of the NHL or its former rival, the World Hockey Association. The rest of the teams were created ex novo as expansion teams or as charter members of the WHA, which merged into the NHL in 1979.

Major League Soccer is technically not an association of franchises but a single business entity, though each team has an owner-operator. The team owners are actually shareholders in the league. The league, not the individual teams, contracts with the players.

The best teams in a given season reach a playoff tournament, and the winner of the playoffs is crowned champion of the league, and, in some cases as world champions. Major League Soccer teams, however, play many games against international competition, due to the global nature of the sport and the presence of regional (CONCACAF) and international (FIFA) organizations.

The North American system has some features of the European model in terms of a tiered structure. Major League Baseball has an associated minor-league system used to develop young talent. Although most minor league teams are independently owned, each one is contracted toa major-league team, which hires and pays the players and assigns them to a given level in its minor-league hierarchy. The teams themselves do not move up or down in the hierarchy. Professional ice hockey has a system somewhat similar to baseball's, while the National Basketball Association operate a small developmental league and the NFL used to operate one in Europe.

Structure of European leagues
English football (soccer) developed a very different system from the North American one, and it has been adopted for soccer in most other countries, as well as to many other sports founded in Europe and played across the world. The features of the system are:


 * The existence of an elected governing body to which clubs at all levels of the sport belong
 * The promotion of well-performing teams to higher-level leagues or divisions and the relegation of poorly performing teams to lower-level leagues or divisions.
 * Matches played both inside and outside of leagues

European football clubs are members both of a league and of a governing body. In the case of England, all competitive football clubs are members of The Football Association, while the top 20 teams also are members of the Premier League, a separate organization. The FA operates the national football team and tournaments that involve teams from different leagues. In conjunction with other countries' governing bodies, it also sets the playing rules and the rules under which teams can sell players' contracts to other clubs.

The rules or Laws of The Game are determined by the International Football Association Board

The Premier League negotiates television contracts for its games. However, although the national league would be the dominating competition in which a club might participate, there are many non-league fixtures a club might play in a given year. In European football there are national cup competitions, which are single elimination knock-out tournaments, are played every year and all the clubs in the league participate. Also, the best performing clubs from the previous year may participate in pan-European tournaments such as the UEFA Champions League, operated by the Union of European Football Associations. A Premier League team might play a league game one week, and an FA Cup game against a team from a lower-level league the next, and then a third game might be against a team from across Europe in the Champions League.

The promotion and relegation system is generally used to determine membership of leagues. Most commonly, a pre-determined number of teams that finish the bottom of a league or division are automatically dropped down, or relegated, to a lower level for the next season. They are replaced by teams who are promoted from that lower tier either by finishing with the best records or by winning a playoff. In England in 2010, Burnley, Hull City and Portsmouth were relegated from the Premier League to the Football League Championship, the second level of English soccer. They were replaced by the top two teams from the second level, Newcastle United and West Bromwich Albion, as well as Blackpool F.C., which won a playoff tournament of the teams that finished third through sixth.

The system originated in England in 1888 when twelve clubs decided to create a professional Football League. It then expanded by merging with the Football Alliance in 1892, with the majority of the Alliance teams occupying the lower Second Division, due to the divergent strengths of the teams. As this differential was overcome over the next five years, the winners of the Second Division went into a playoff with the worst placed team in the First Division, and if they won, were promoted into the top tier. The first club to achieve promotion was Sheffield United, which replaced the relegated Accrington F.C.

Relegation often has devastating financial consequences for club owners who not only lose TV, sponsorship and gate income but may also see the asset value of their shares in the club collapse. Some leagues offer a "parachute payment" to its relegated teams for the following years in order to protect them from bankruptcy. If a team is promoted back to the higher tier the following year then the parachute payment for the second season is distributed among the teams of the lower division. There is of course a corresponding bonanza for promoted clubs.

The league does not choose which cities are to have teams in the top division. For example, Leeds, the fourth-biggest city in England, saw their team relegated from the Premier League to the Championship in 2004, and then saw their team relegated to the third-tier League One in 2007. Leeds will remain without a Premiership team as long as it takes for Leeds United or in theory any other local club to do well enough in the second-tier division to win the right to play in the Premiership. Famously, the French Ligue 1 lacked a team from Paris for some years.

As well as having no right to being in a certain tier, a club also has no territorial rights to its own area. A successful new team in a geographical location can come to dominate the incumbents. In Munich, for example, TSV 1860 München were initially more successful than the city's current biggest team Bayern München. London has 14 professional teams, including five Premier League teams.

Clubs may be sold privately to new owners at any time, but this does not happen often where clubs are based on community membership and agreement. Such clubs require agreement from members who, unlike shareholders of corporations, have priorities other than money when it comes to their football club. For similar reasons, relocation of clubs to other cities is very rare. This is mostly because virtually all cities and towns in Europe have a football club of some sort, the size and strength of the club usually relative to the town's size and importance. Anyone wanting ownership of a high ranked club in his native city must buy the local club as it stands and work it up through the divisions, usually by hiring better talent. Buying an existing top-flight club and move it to the city is problematic, as the supporters of the town's original club are unlikely to switch allegiance to an interloper. There have been some cases where existing owners have chosen to relocate out of a difficult market, to better facilities, or simply to realize the market value of the land that the current stadium is built upon. As in the U.S., team relocations have been controversial as supporters of the club will protest at its loss.

Systems around the world
Leagues around the world generally follow one or other of these systems. Most sport leagues in Australia are based on the North American model, with the most notable examples being the Australian Football League (Aussie rules) and National Rugby League (rugby league). Nippon Professional Baseball in Japan uses this system due to American influence on the game. In cricket, the Indian Premier League, launched in 2008, also operates on this system. The Super League, which is the top level of rugby league in the United Kingdom and France, will be run on a franchise basis from 2009.

The promotion-relegation system is widely used in football around the world, notably in Africa and Latin America as well as Europe. The most notable variation has developed in Latin America where many countries have two league seasons per year, which scheduling allows because many Latin American nations lack a national cup competition. Promotion and relegation has historically been used in other team sports founded in the United Kingdom, such as rugby union, rugby league and cricket.

The European model is also used in Europe even when the sports were founded in America, showing that the league system adopted is not determined by the sport itself, but more on the tradition of sports organisation in that region. Sports such as basketball in Spain and Lithuania use promotion and relegation. In the same vein, the Australian A-League does not use the pyramid structure normally found in football, but instead follows the tradition of Australian sports having a franchise model and a playoff system that better suits a country with a few important central locations where a sport needs to ensure there is a team playing with no risk of relegation.

East Asian countries such as Japan, China, South Korea and Taiwan have a particular differentiation among leagues: "European" sports such as football and rugby use promotion and relegation, while "American" sports such as baseball and basketball use franchising, with a few differences varying from country to country. A similar situation exists in countries in Central America and the Caribbean, where football and baseball share several close markets.