The Organization of Sports Leagues

Sports leagues have been organized in many different ways. This essay examines the incentive structure and efficiency of different forms of league organization, including the methods for scheduling games, admitting new members, and making operational decisions. This article also compares operations and outcomes in Europe and North America, and concludes that the European system of promotion and relegation is superior to the closed structure of American leagues, and that the American system of multiple parallel leagues to determine qualifications and seeding in a post-season tournament is efficiency enhancing. The article also discusses the optimal size and number of leagues, and concludes that both the European and American systems produce too few major league teams, largely because they have permitted major leagues to be monopolies.