If there was one innovation we could see brought to professional sports in the United States, we would propose introducing team relegation and promotion to each of the major leagues.
If you're a fan of the English Premier League, you already know what we mean, but to explain it simply, here's how it goes. Teams are ranked according to how many points they earn during the regular season. The bottom three teams in the rankings are demoted to a lower league, while in their place, the top three teams from that lower league are promoted up to the big leagues.
What relegation does is fix the incentive problems that the owners and players of poorly performing teams often have that run counter to the interests of their team's fans. For example, in a sport like basketball, teams doing poorly will often make their losing seasons even worse for their fans by tanking - deliberately seeking to lose as many games as possible in order to increase their odds of winning a high draft pick to claim highly valued players in the next season's draft of new players. In a sport like baseball, past a certain point of the season, teams with losing records effectively throw in the towel on the idea of competing and hold a fire sale, trading away their star players to lower their payrolls as they attempt to replace them with low-cost prospects who may someday develop into future stars.
We're omitting hockey from this discussion because of the Cinderella story of the 2018-19 St. Louis Blues, who went from last in January to the Stanley Cup finals this season, and also football, where outside of the dynastic success of the New England Patriots in recent years, league rules tend to promote a more equitable distribution of talented players among teams, making the rest of the league more genuinely competitive over its short 16-game regular season.
Relegation could solve the incentive problems losing owners have because they would no longer stand to gain by deliberately adopting losing strategies during a season. Rather, because the big leagues are where the big money in professional sports is to be found, they would stand to lose more financially if they did. Better still, the teams of bad owners who consistently field lackluster teams would find a permanent, out-of-sight home in their sport's cellar. Where they belong.
For suffering fans, the penalty of relegation would motivate their teams, keeping their games both competitive and entertaining as team owners and players would have stronger incentives to avoid tanking their seasons.
On the plus side, teams being promoted from the minor leagues and their fans could benefit greatly from their new major league status. In addition to earning bigger paychecks for better managed teams, turning in winning records in the lower league would be rewarded with the privileges of low draft picks to acquire top talent that currently goes to the worst-performing teams in the major leagues, where a top minor league team can become more capable of competing effectively in their new, more challenging league.
What started us going down this route was considering the possibilities raised by the Numberphile video featured above, where Brady Haran, Tony Padilla, and Adam Moss simulated one million seasons of the English Premier League to answer the question of how many points would it take on average to come in first place, how many points would it take to finish in the Top 4 (which comes with an additional financial reward for these top flight teams), and how many points would a team have to accumulate on average to avoid being relegated. If you'd rather skip the video, the answers to these questions are presented here.
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Closing values for previous trading day.
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