Promotion vs. Closed Leagues
The disparity between the closed league format in the United States, specifically in Major League Soccer (MLS), and the promotion and relegation systems in Europe and South America is one of the largest structural contrasts in sport iself. These two systems have very different effects on the long-term viability, competitive balance, and financial motivations of clubs.
The majority of leagues in Europe and South America use a promotion and relegation system, in which teams are moved between divisions according to their performance. While the top teams from the lower tier are promoted, the underperforming clubs in the top level are demoted to a lower league. Because clubs are always battling for survival or promotion, this structure promotes fierce competitiveness throughout the season. The prospect of competing in the top division provides smaller clubs with both financial and athletic incentives, which frequently leads to large investments in infrastructure, scouting, and youth development. Relegation, on the other hand, can have disastrous financial effects since it lowers television revenue, sponsorships, and attendance. For instance, to lessen the financial impact on relegated teams, the English Premier League offers "parachute payments," yet clubs still face difficulties.
In contrast, MLS's closed league system is based on the North American sports paradigm, meaning that teams are always a part of the league regardless of how well they play. Since there is no chance of losing top-tier status, this strategy gives investors stability. As demonstrated by recent additions like St. Louis City SC and Charlotte FC, where ownership groups are required to pay significant expansion fees, it permits controlled expansion. But the absence of promotion and relegation might cause teams near the bottom of the league to stagnate, with little motivation to improve other than to earn a better draft pick.
The concept of financial risk vs return is a crucial distinction. In South American and European leagues, the possibility of promotion encourages ambition and investment, whereas relegation has a hefty financial cost. MLS, on the other hand, guarantees financial stability for every club, but also restricts the opportunities for advancement for lower-tier teams in leagues such as the USL, which lessens the motivation to nurture talent in-house.
There are trade-offs in both systems, as always . While stability is guaranteed by the closed league format, competitive urgency may be hampered. Although there are ongoing discussions about introducing promotion and relegation as MLS expands, the league is currently steadfast in its closed structure.
References:
Lane, Barnaby. "MLS Promotion/Relegation: The Arguments For & Against." Sports Illustrated, 29 Jan. 2025, https://www.si.com/soccer/arguments-for-against-mls-promotion-and-relegation.
Lee, John Jay. "Why Promotion and Relegation is Overrated and a Closed System is Far Superior." Urban Pitch, 5 Feb. 2021, https://urbanpitch.com/why-promotion-and-relegation-is-overrated-and-a-closed-system-is-far-superior/.