European Versus American Sporting Models

Europe and North America have developed the two dominant sporting models in the
world. The European sporting model is used in Europe and most other parts of the world
while the North American model is mainly used in the U.S and Canada. The two sporting
models have significant differences. For instance, there are major differences in the way the
sports are developed, the level of grassroots participation, level of commercialization and the
management of the sports leagues. This paper examines one of the most significant difference
between European and North American sports models – league system- and provides reasons
why European sports model should adopt the North American league system.

With regards to league system, European sports models has an open league system
while North American sports models has a closed league system. The primary difference
between the two league systems is ease of entry and exit. In an open league system, the
league has multiple divisions that are organized in a hierarchical manner. Movement from
one league division to another is determined by a promotion and relegation system (Bank,
2018). Teams in lower league divisions that perform well are promoted to higher league
divisions and teams in higher league divisions that perform poorly are relegated or demoted
to lower league divisions (Bank, 2018). Thus, the promotion and relegation of a team from
one league division to another is purely based on their field performance in a given season.

In the closed league system, teams do not face promotion or relegation. The entry or
exit of a team from the league is not dependent on their on-field performance. Rather, the
league is made up of a fixed number of teams that compete from season to season without
any fear of being dropped from the league. Just the same way it is difficult for a team to be
dropped out of the league, it is also very difficult to enter a league. Usually, existing teams in

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a league have to agree to admit a new team into the league (Bank, 2018). The entrance is also
often accompanied by payment of large sums of money by the team seeking entrance into the
league.

There are major benefits that a closed league system has over an open league system.
Perhaps the most important one is financial stability for the teams. In an open league system,
the relegation of a team often results in serious financial troubles for the team as it is likely to
receive less revenues from broadcasting and sponsorship contracts and is also less likely to
attract talented players to help it remain competitive. Even big teams in the top divisions face
financial difficulties as they have to spend a lot of money acquiring talented players but enjoy
relatively lower returns from broadcasting deals and contracts because the high competition
of open league systems greatly lowers their bargaining power (Caglio et al., 2019). Apart
from teams having zero risk of suffering financial problems due to relegations, closed leagues
also operate almost as monopolies (Bank, 2018). Therefore, they have a lot of market power
that allows them to negotiate lucrative broadcasting and sponsorship deals for their teams.
This majorly explains why franchises in top North American leagues such as Major League
Baseball (MLB), National Football League (NFL), and National Basketball Association
(NBA) are in a superior financial health than most teams in European open leagues, such as
those in the English Premier League where many teams, even big ones, have huge debts and
make losses (Caglio et al., 2019).

Due to the benefits of a closed league system that have been highlighted in this paper,
European sporting organizations are encouraged to adopt a closed league system in order to
improve the financial health of their sporting clubs. For a start, the feature could be adopted
for top sporting clubs that have consistently been in top division for the past decade. Apart
from putting the clubs in a healthy financial position, the system will also ensure that top

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leagues are not dominated by a few sporting giants. For instance, in the Spanish top division
in soccer, competition for top league position has largely been a two-team affair (Barcelona
and Real Madrid). With a closed league system, the other teams in the top division will get
financial resources to acquire talented players who will enable them to effectively compete
with the giant clubs.

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References

Bank, S. A. (2018). Will US Soccer be forced to adopt promotion and relegation? Journal of
Legal Aspects Sport, 28, 3.

Caglio, A., Laffitte, S., Masciandaro, D., & Ottaviano, G. I. (2019). Does Financial Fair Play
Matter? The Real Effects of UEFA Regulation for European Football Clubs. The Real
Effects of UEFA Regulation for European Football Clubs (September 1, 2019).
BAFFI CAREFIN Centre Research Paper, (2019-119).