Promotion and relegation vs the franchise model, and the price

Two leagues face the same problem. Twenty clubs, a season that runs eight or nine months, and the certainty that by February half of them will be out of contention for anything worth winning. A competition where a third of the fixtures do not matter is a competition that loses its audience, and every league in the world has to answer for those matches somehow.

Promotion and relegation vs the franchise model is a comparison of two answers to that problem, and neither of them is a mistake. The open pyramid gives the bottom of the table something to fear. The closed league gives the bottom of the table something to build towards. Both work. Both cost something, and the costs are paid by completely different people.

Most arguments about this get stuck because each side describes its own model's benefits and the other model's failures. What follows tries to price both, including the parts that are awkward for the model I suspect most readers of this site prefer.

The same problem, and the two currencies used to solve it

Strip away the history and the two systems are making opposite bets about where the value in a league sits.

An open system says the value is in consequence. If finishing bottom means leaving, then every fixture in April carries weight for somebody, and the club in seventeenth place is playing a match with a real outcome attached even though it will win nothing. The currency it spends to buy that is certainty. No club in an open league knows what competition it will be in next year, which means no club can plan revenue more than a season ahead, and a bad twelve months can cost a hundred-year-old institution its solvency.

A closed system says the value is in the product's reliability. Every member is permanent, so the league can plan a decade out, sign national contracts of enormous size, and impose cost controls that all thirty owners will still be living under in 2040. The currency it spends is jeopardy. Nothing that happens on the field can remove a member, so the last month of a bad season is genuinely empty, and the league has to manufacture reasons to watch it.

That framing matters because it explains why the two models cannot simply borrow each other's best features. The tools are not detachable. A draft needs closure. Relegation needs an open pyramid beneath it. The full mechanics of the open version, including the tiebreakers, the play-offs and the ground grading a promoted club has to satisfy, are set out in the companion piece on how promotion and relegation actually operates. This one is about the trade.

• Title5.0%
• Continental qualification20.0%
• Relegation15.0%
• Nothing in particular60.0%

Constructed example using a typical European allocation: one title, four continental qualification places and three relegation places. Invented distribution, not any particular league's, and the point is the size of the last slice rather than its exact value.

Show the numbers

A twenty-club open division, sorted by what is at stake

Item	Value
Title	1
Continental qualification	4
Relegation	3
Nothing in particular	12

Twelve of twenty. Even in the model that is supposed to solve the dead-rubber problem, most of the table is playing for position and pride by April. The open system does not eliminate meaningless matches. It moves a block of them to the bottom of the table and attaches consequences there instead, which is a real improvement and a smaller one than its advocates usually claim.

What an open pyramid actually produces

Three things, and only one of them is the one people talk about.

Jeopardy at the bottom. A club fighting relegation is playing matches with a genuine outcome attached, and its supporters behave accordingly. That is worth money in ticket sales and it is worth a great deal in the intensity of the broadcast product. It also produces the sport's most reliable drama: a final day where four clubs are playing simultaneously and the identity of the survivor changes three times in ninety minutes.

A route in from nothing. The pyramid is theoretically connected all the way down, which means a club founded next Tuesday has an unbroken chain of promotion places between it and the top division. Almost nobody travels the whole chain. The value is not the outcome, it is the property: nobody's place is granted, and a club that is well run can rise while a club that is badly run can fall, without a committee's permission.

A disciplining mechanism that no closed league has. In a closed league, a badly run club is punished by losing and by empty seats, and that is all. It keeps its share of central revenue, keeps its permanent membership, and its owner can hold it indefinitely while extracting whatever the franchise generates. In an open league the same behaviour ends with the club in a lower division with lower income, which is a real sanction applied automatically, without any governing body having to prove anything.

The costs are equally concrete, and they fall on the same clubs.

Income falls in a single step when a club is relegated, because central distributions are set by division. Costs fall on a slope, because contracts run for years. That mismatch is the thing that puts clubs into administration, and it means the open system's discipline is applied with a bluntness that occasionally kills institutions that had merely been unlucky.

And the uncertainty is expensive even for clubs that never go down. A finance director who cannot state next season's central income within a wide range cannot borrow cheaply, cannot commit to a stadium, and cannot sign a five-year sponsorship on the terms available to a franchise with guaranteed membership. Uncertainty has a price, and it is paid every year by every club in the division, not only by the three that get relegated.

• Open-league club
• relegated
• Closed-league club
• finishes last

Constructed example. Both clubs finish last in season one. Units are an invented index where the top division's per-club central distribution is 100; they are not currency and are not drawn from any real league's accounts.

Show the numbers

Central income after one bad season, in an invented index

Item	Open-league club	relegated	Closed-league club	finishes last
Season 1	100	100
Season 2	30	100
Season 3	26	102
Season 4	24	104

The chart is invented but the shape is the entire argument. The closed-league club's line does not move, because nothing that happens on the field can move it. The open-league club's line falls off a shelf and then keeps drifting down as the tapering support attached to relegation runs out. Whether you regard the flat line as prudent or as a scandal is essentially a question of temperament, and it is the honest core of the disagreement.

What a closed league buys with the place it never loses

Closure is not an absence of competition. It is a purchase, and the things it buys are specific.

Cost certainty, and therefore a hard salary cap. A salary cap only functions if every club under it is going to be under it next year too. Otherwise a club facing relegation would have every reason to break the cap, take the fine, and stay up. Closed leagues can therefore run hard caps, floors that force minimum spending, and luxury taxes, and they can negotiate all of it collectively with a players' union that represents the whole labour market. The comparison of how differently these systems are built league by league is worked through in the piece on what salary caps look like across the major sports.

Franchise value. A closed league's membership is an asset with no downside risk attached to sporting performance. That is why franchises trade at multiples that have very little to do with annual profit, and why expansion fees can be enormous: what is being sold is a permanent seat at a table whose central income is contracted years in advance.

The draft, which an open league simply cannot use. A draft hands the best available young players to the worst teams. It is the single most powerful balancing tool in sport, and it is unavailable to an open league for a reason that takes ten seconds to see: the worst teams in an open league are the ones about to be relegated, so a draft would systematically transfer talent out of the league. There is a second obstacle, which is that a draft restrains where a player may work, and that restraint survives only because a union has bargained for it in exchange for other things. The mechanics of the best-known version are in the guide to how the NFL draft is actually run.

Planning. A closed league can schedule a decade of showcase events, commit to international series, and sell a national broadcast package covering competitions that have not been played yet, because it knows exactly which clubs will be playing.

• 0Clubs relegated from a closed league for finishing last
• 0Clubs promoted into a closed league for winning a lower competition
• 0Routes into a closed league other than a vote of its existing members
• 12Clubs relegated somewhere in the English professional pyramid each season

The first three are structural facts about a closed league. The fourth counts the clubs relegated each season across the four professional divisions of the English football pyramid, as fixed by the competitions' rules.

Those three zeros are the whole of the case against the closed model, and stating them plainly is more effective than any amount of argument about romance. A competition in which no result can change the membership is, at the level of structure, a private members' club that plays sport. Whether that is objectionable depends on what you think a league is for.

Why a closed league can redistribute and an open one struggles

This is the least understood difference and the most consequential one.

Closed leagues share revenue heavily. National broadcast money is often split equally between members regardless of size, market or performance. Gate receipts are sometimes shared. The rationale is straightforward and is usually attributed to an early league executive's observation that a league selling a product jointly is only as strong as its weakest member.

Open leagues share far less, and the reason is not greed. It is structural.

In a closed league, money passed to a weaker member is money given to a permanent partner. It buys a better opponent, a better broadcast product and a more valuable league, and it cannot buy the recipient your place, because your place is not available. The cost of sharing is purely competitive, and it is bounded.

In an open league, money passed downwards goes to clubs that are competing for the place you occupy. Fund the division below generously enough and its clubs come up, take your position, and take the income attached to it. Redistribution in an open pyramid is not charity to a partner, it is capital supplied to a rival with a live route to your seat. Clubs know this, they vote accordingly, and the result is that open leagues redistribute at the level their internal politics will bear, which is usually much less than an economist would recommend.

The workaround that open systems have arrived at is solidarity and parachute payments: transfers from the top division to the tier below, and to relegated clubs specifically, tapering over a few seasons. Both are compromises, and both create their own distortion. Payments to relegated clubs let those clubs carry a wage bill their new rivals cannot match, which makes the division below less competitive in exactly the way heavy revenue sharing is supposed to make a league more competitive. Defenders point out that without the taper, relegation becomes an extinction event and no promoted club would dare invest in a squad. Both things are true at once, which is why the argument never ends.

There is one further asymmetry. A closed league negotiates its national broadcast deal as a single seller with permanent members, so it can bind everyone to the same distribution formula for a decade. An open league's membership changes every summer, so its distribution formula has to survive being renegotiated by a different set of clubs every few years, several of whom were not in the room last time. Stable redistribution is much harder to build on a membership that is deliberately unstable.

Stadiums, academies, and the length of the horizon

The models produce different investment horizons, and this shows up in concrete.

A closed-league owner deciding whether to fund a stadium is making a straightforward calculation over thirty years with a guaranteed top-division tenant. There is no scenario in which the building hosts second-tier sport, because there is no second tier. Lenders price that accordingly, and public authorities negotiating a contribution are dealing with a counterparty whose sporting status cannot change, which alters the bargaining in ways examined in the piece on how stadium projects actually get financed.

An open-league club making the same decision is borrowing against income that could fall by two thirds in nine months. It borrows less, or at a higher rate, or it builds smaller, or it waits for a promotion that may not come. The result is visible across European football: grounds expanded in increments over decades, financed in stages, sized for the division the club is actually in rather than the one it hopes to reach.

Academies point the other way, and this is the part that gets missed.

A closed league with a draft has weak incentives to develop players, because the best young talent is allocated centrally rather than recruited. Development happens in colleges, in junior leagues and in systems the clubs do not pay for. An open-league club has every incentive to run an academy, because a player it develops is an asset it owns outright, sellable into a transfer market, and because there is no draft that will hand its best prospect to somebody else. That is a structural reason why European football's youth development is embedded in the clubs and North American development largely is not, and it is a genuine point in the open model's favour that has nothing to do with romance.

The horizons also differ in a subtler way. A closed league plans in decades because its membership is fixed. An open league plans in seasons because its membership is not, and a club that plans in seasons behaves differently: it hires managers on short deals, it buys players who can help immediately rather than in three years, and it fires people in October. The compressed horizon is not a cultural failing. It is the rational response to a rule that can remove your revenue in May.

1. 1A market is identified, usually by the leagueExpansion is a decision about which cities the competition wants to be in, made by the existing members. A city with no organised team can be chosen ahead of one with a long-established club, because there is no mechanism by which an existing club can earn its way in.
2. 2An ownership group is assembled and vettedThe prospective owners are examined on wealth, on the source of their funds and on their willingness to abide by league rules. The league is choosing a business partner it cannot later remove.
3. 3A venue is committedAlmost always a new or substantially rebuilt stadium or arena, frequently with public money attached, agreed before the club exists. The building precedes the team, which is the reverse of the open-league sequence.
4. 4An expansion fee is agreedThe new member pays the existing members for the privilege of joining. That payment is the clearest evidence that membership is property rather than a sporting entitlement, since nobody pays to enter a competition they could have qualified for.
5. 5The existing owners voteAdmission requires a supermajority of the current membership. Any existing club can therefore veto a rival it does not want, and the criteria are whatever the owners say they are on the day.
6. 6The new club stocks a rosterUsually through an expansion draft, in which existing clubs protect a set number of players and the newcomer selects from the rest, plus a favourable position in the ordinary entry draft. The league deliberately hands the newcomer a viable squad.
7. 7Central revenue phases inNew members typically receive a reduced share of national distributions for an initial period before moving to a full share, which compensates the incumbents for diluting the pool.
8. 8The place is permanent from day oneFrom its first fixture the club holds the same membership as a founder. It cannot be relegated, and the only way it leaves is by being sold, folded or moved.

The general sequence used by closed leagues to admit an expansion member. It is a description of the process rather than any single competition's bylaws, and no fee, vote threshold or timescale is quoted.

Read that sequence next to the open-league equivalent, which is: win your division, satisfy the ground grading and licensing criteria for the division above, and turn up. One route is a commercial negotiation among existing owners. The other is a result. Neither is corrupt. They are answering different questions about what a league is.

Competitive balance, handled honestly

This is where the argument usually goes wrong, because both sides cite evidence that does not support what they want it to.

The claim from the closed side is that closed leagues have better competitive balance, and the surface evidence is real: closed leagues generally show more turnover among champions, more movement between the top and bottom of the table year to year, and fewer sustained dynasties than the big European football leagues.

The claim from the open side is that closed leagues manufacture balance in outcomes while tolerating terrible teams, and that an open league's bottom half is more competitive because it is playing for survival.

Both claims are probably true, and neither tells you anything about promotion and relegation, because the comparison is confounded almost beyond repair. Four confounders matter most.

Roster size and the number of decisive players. A sport where one player takes a third of a team's meaningful actions behaves completely differently from one where twenty-two players are on the field and the best of them touches the ball for a couple of minutes. Concentration of talent affects balance far more than league structure does, and it varies enormously between the sports being compared.

Revenue sharing and cost control. Closed leagues that share revenue heavily and run hard caps are balanced. Closed leagues that do neither are not. If closure were the cause, every closed league would be balanced, and they plainly are not. That points at the tools rather than the structure, and the tools happen to require closure, which is a different and much narrower claim.

Games played. A season of seventeen matches produces a table with far more noise in it than a season of thirty-eight. Some of the turnover that looks like balance is a small sample being reshuffled, and standard measures of balance are sensitive to season length in ways that make cross-sport comparison close to meaningless without heavy adjustment.

Playoff structure. A competition that admits half its members to a knockout tournament will produce varied champions whatever the regular season looked like. That is balance in outcomes manufactured after the fact, not balance in quality, and it is not evidence about how the league is built.

Once those are controlled for, honestly, the amount of evidence attributable to open versus closed structure alone is small and the effect is not clearly in either direction. What can be said with more confidence is narrower and more useful.

Open leagues reliably produce more matches with consequences attached in the last quarter of a season, because the bottom of the table is live. Closed leagues reliably produce more turnover at the top, because the tools they can use point that way. And an open league without cost controls will tend to concentrate resources at the top over time, because success brings continental qualification, which brings money, which brings success, and there is no cap and no draft to interrupt the loop.

That last mechanism is the strongest argument against the open model, and it deserves to be stated by its supporters rather than only by its critics.

Relocation is routine in one model and unthinkable in the other

Nothing separates the two systems more starkly, or reveals more clearly what a club is understood to be.

In a closed league, a franchise is a licence to operate in a territory. Territories can be changed, subject to a vote of the other owners and a set of relocation criteria, and clubs do move: from a city that will not fund a new arena to one that will, from a small market to a larger one. Supporters in the abandoned city are, in the structure's own terms, customers who did not buy enough. That is not said out loud, but it is what the rule permits.

In an open league, moving a club is close to unthinkable, and the one serious attempt in English football proves the point better than any argument. When a London club was permitted to move some fifty miles to a new town, the reaction was not resignation. The supporters founded a new club, entered it at the bottom of the pyramid, and spent years climbing back up through divisions most of the country has never heard of. The pyramid made that possible: because there is a route from the bottom, a supporter base that loses its club can build another one and play its way back. In a closed league that option does not exist, because there is nothing to be promoted into.

The deeper point is about what the two models think they are selling. A franchise is a business licensed to a market. A club in an open pyramid is a place's representative in a national competition, and its right to be there is earned annually. You cannot relocate something whose whole claim to a division is a result, because a relocated club has not earned the new town's place in anything.

Every attempt to close European football has failed, and the reasons repeat

The idea of closing the top of European football is not new and it is not dead. It has been tried in several forms and each attempt has broken on roughly the same rocks.

An organised lobby of large clubs pressed for guaranteed places in continental competition for years, and extracted format changes rather than closure. A domestic reform plan floated in England proposed shrinking the top division and concentrating voting power in a handful of long-standing clubs, in exchange for a large payment down the pyramid, and was abandoned within days once its governance provisions were read closely.

The most serious attempt was the Super League announced in April 2021, with fifteen permanent members and five qualifying places, which is closure in the technical sense: most of the field could not be removed by results. It collapsed in about seventy-two hours under supporter protest, government threats and public opposition from players and managers at the clubs involved.

The legal story then diverged from the practical one, and the gap between them is instructive. In December 2023 the Court of Justice of the European Union held that the pre-authorisation and sanctioning rules football's governing bodies used to block rival competitions were not framed by transparent, objective and non-discriminatory criteria, and so could not be relied on as they stood. That was a win for the organisers on the law. It changed nothing on the ground. The clubs had already gone, the successor project drifted through rebranding and revised formats without attracting them back, and the last remaining club withdrew in February 2026, which ended it.

Why do these attempts keep failing? Three reasons, in descending order of how often they are acknowledged.

Supporters are not customers in the way the model assumed. A closed competition removes the thing many of them believe they are paying for, and the reaction was not a decline in renewals but immediate, organised and public opposition at the clubs themselves.

The value being closed off was partly created by the openness. A large club's brand is built on a century of matches inside a national pyramid, against clubs it can lose to. Detaching it from that context does not carry the value across.

And the domestic league is where most of the fixtures are. A club playing eighteen closed continental matches still needs thirty-eight domestic ones, and no proposal has ever explained convincingly how a club with a guaranteed European place plays in a domestic competition it can be relegated from.

What Europe did instead was compromise: keep the pyramid, expand and restructure the continental competition, and increase the number of matches between large clubs without guaranteeing anybody a place. The mechanics of that compromise are set out in the piece on how the Champions League league phase now works, and it is best understood as the price the governing body paid to keep the structure open.

Which model suits which market

The useful question is not which model is better. It is which model fits a given sport in a given place, and the answer turns on things that have nothing to do with sporting philosophy.

Does the sport already have clubs? England had hundreds of football clubs before it had a league, so the pyramid formalised something that already existed. Where a sport is being introduced to a market with no existing clubs, the league has to create the teams, and investors who are asked to create a team from nothing will want a guarantee that it cannot be relegated out of the competition they are funding. Closure, in a new market, is a financing device.

How big is the country, and how far apart are the cities? A continent-sized territory with expensive travel favours fewer clubs, fixed schedules and conference structures. A country where fifty professional clubs sit within a few hours of each other can support a deep pyramid cheaply.

How many sports compete for the same audience? A market with several major sports fighting for the same months and the same broadcasters rewards a stable, plannable product. A market where one sport dominates can afford more chaos.

Who already owns the clubs, and what were they promised? This is the binding constraint in practice. Owners who paid a large fee for a permanent place, and lenders who lent against it, hold contracts. Introducing relegation destroys value they have paid for, which is why closed leagues almost never open and why the movement in the other direction is easier. English rugby league suspended promotion and relegation in favour of a licensing system for two cycles, found that the argument for it did not survive contact with the clubs below, and restored relegation.

Cricket is the clearest natural experiment in world sport, and it happens to be running both models in the same country in the same summer. England's county championship operates two divisions with promotion and relegation, a red-ball competition whose bottom division has real consequences attached to it. Alongside it sits a closed eight-team short-format competition whose membership no result can change. India went further and built a fully closed franchise league from scratch, with a centralised talent allocation mechanism that does the job a draft does elsewhere, described in the piece on how the IPL auction distributes players. The same sport, the same decade, three different answers, each one fitted to the market it was built for rather than to a principle.

That is the honest conclusion of the comparison. Neither structure is a moral position. Each is a set of trade-offs that suits some markets and not others, and the countries that have chosen badly are usually the ones that imported a structure wholesale rather than asking which problem they were trying to solve.

Four questions to ask before taking a side

Anybody arguing about this should be able to answer four questions about the league in front of them, and most cannot.

Where does the money come from, and is it shared? A closed league that does not redistribute has bought certainty and spent it on nothing. An open league with heavy solidarity payments has more in common with a closed one than its supporters admit.

What happens to the club that finishes last? If the answer is a better draft pick, the league has to manufacture reasons for that club's final month. If the answer is a two-thirds cut in income, the league has consequence and a solvency problem to manage.

Who decides who is in the competition? Results, or a vote of the existing members. Everything downstream, from relocation to expansion fees to whether a draft is possible, follows from that answer.

How long is the planning horizon of the clubs in it? Look at how stadiums are financed and how long managers last. Both are direct readouts of how much certainty the structure provides, and both tell you more about a league's real design than anything in its constitution.

Ask those four about any competition in the multi-sport archive and the structure gives itself away within a paragraph. The models are not opposites so much as two settings on the same dial, and every league in the world sits somewhere on it, usually further from the pure version of its own model than its supporters believe.