Why baseball needs promotion and relegation

Part 3 of "Toward a Better Baseball"

During MLB’s 2023 offseason, I am posting a series of essays titled “Toward a Better Baseball.” The goal of the series is to articulate a vision for the sport for when MLB loses its monopoly power. This is Part 3. Read the preceding installments here.

Oakland Coliseum. Photo by Caleb Woods on Unsplash

On May 28, the final matchday of the Premier League’s 2022-23 season, Everton defeated Bournemouth 1-0 to avoid relegation and maintain their place in English football’s top division for the 69th consecutive year. The 39,201 supporters in attendance at Liverpool’s ancient Goodison Park erupted at the final whistle and many of them stormed the pitch to express their elation and relief at coming in [checks notes] fourth-to-last place. A traditional power mired in mediocrity and scandal, Everton was afforded another season to reload and compete for the trophies that matter.

Later that day and half the world away, the Oakland Athletics lost their 11th straight game before a crowd generously counted at 8,809. The defeat to the Houston Astros dropped them to 10-45 on the season, but the team’s management never tried to get out of last place because there were incentives not to. The worse the record, the higher the draft picks, and in the offseason the league's revenue-sharing model disbursed record subsidies to cheap teams (i.e. the A’s). The cherry on top: six weeks after the A’s finished their season with 112 losses, the worst performance for a team since 2019, MLB owners approved the franchise’s lucrative relocation to Las Vegas.

Each scenario is a result of the respective league structure. The Premier League uses a promotion/relegation system common in international sports. It rewards teams that invest in their roster and are good and penalizes teams that don’t and are bad. It gives significance to each match. And it expands interest in the league.

MLB has a fixed membership. Teams stay in the club no matter how bad they are. Many games mean nothing. And it depresses interest in the league. Some people think baseball is no longer America’s pastime, but they are incorrect. MLB, like the country, despises competition, does all it can to suppress it, and doesn’t care about the impacts to the non-rich.

Fan interest

Most sports leagues throughout the world are “open,” in that they promote (or gain) and relegate (or lose) a number of teams after each season. There are many variations of the open system, but the English football pyramid is a well-known and useful example.

Dozens of leagues, including several containing divisions within them, form a hierarchy with the Premier League at the top. After every season, the three worst of the twenty teams are relegated to the second division, called the Championship. The three best teams in the Championship are then promoted to the Premier League. Even today’s powerhouses at the top of the pyramid—Manchester City, Arsenal, and so on—are subject to relegation.

Promotions and relegations occur between each level of the pyramid, presumably until the Football Association, the organization overseeing this all, runs out of half-drunk pub teams—it is theoretically possible for a band of local blokes to rise through the ranks to the Premier League. While this never happens in practice, a close approximation is the case of Luton Town Football Club. Since the 2013-14 season, the team has played in half a dozen divisions and in May 2023 won promotion to the Premier League. A charming, if bizarre aspect of the team’s ascent is that attendees at Luton’s home grounds of Kenilworth Road, opened in 1905, walk through townhomes and businesses to find their seats. 

MLB would never grant a Luton Town, based in a mid-sized city thirty miles outside of London, access to the major leagues. It has proven that in how it’s treated Troy, New York, a saga I wrote about in this series’ first installment. An open system would undermine its control of where baseball is played, which is the foundation of MLB’s monopoly over the sport. It constrains the supply of baseball so it can exploit larger media markets and play cities off one another, as the A’s did, to extract taxpayer dollars for stadium construction and rehabilitation.

After MLB completed its hostile takeover of the minor leagues in 2021, it eliminated several teams, including Troy’s, and now there are 150 professional baseball teams in the sport’s top four divisions (the majors down to Single-A), and these teams are locked into those divisions until MLB says otherwise. While there are only 92 teams in English football’s top four divisions, the U.S. is six times larger in population than England and all 732 (!) football teams in the country’s top nine divisions were eligible this year for the famed FA Cup.

England’s structure is based on and creates an egalitarian spirit: everyone should have a shot at glory in the national sport. It’s an ethos that doomed the American-style Super League, one that would have seen the “Big Six” teams—Arsenal, Chelsea, Liverpool, Manchesters United and City, and Tottenham—breakaway from the traditional English and European football systems to join six other clubs in a closed league. The battle, waged over a few days in April 2021, was framed as billionaires vs. the people over who controls football, and the people won. English football fans immediately and intensely resisted the move, and by the ear they dragged their clubs back home. The Super League project collapsed without the Big Six.

This is what makes MLB Commissioner Rob Manfred proclaiming the league’s antitrust exemption a “fan-friendly doctrine in the law” so maddening, as closed leagues are inherently anti-fan. How is it fan-friendly to unilaterally decide who gets to play and where? How is it fan-friendly to let the A’s exist in the major leagues despite their owner’s refusal to invest in a competitive roster? 

We will never experience the novelty of the New York Yankees traveling up the Hudson to play in Troy’s 4,500-seat Joseph L. Bruno Stadium, and we will never experience the excitement of the erstwhile Staten Island Yankees, the “Baby Bombers,” becoming the third major league team in New York City. In other words, small cities will never be energized by their team playing a powerhouse or possibly making it to the top division, and big cities will never have their local sports cultures enlivened with several professional clubs. (Conversely, we will never be able to punish teams who decide not to compete.)

Researchers at the Stanford Institute for Economic Policy Research found that promotion and relegation leads to an overall increase in attendance and revenues, but studies don’t matter when MLB has decided that captive audiences for its thirty teams are preferable to organic growth for and broader interest in the sport.

Game significance

I have both reverence and concern for the fans who subjected themselves to the thirteen games last season between 101-loss Chicago White Sox and 106-loss Kansas City Royals. On one hand, that’s some serious Midwestern loyalty. On the other hand, why? The White Sox were trying to be bad after failing for years at trying to be good, and like a cicada the Royals have been underground, maturing, waiting for their next window of contention. Their matchups offered zero competitive value because MLB’s closed structure is zero-sum.

You either win the World Series or you don’t, and only a few teams have a realistic shot at winning the championship. In any one year, it seems half the teams in the league try to be bad in an attempt to slash costs and improve their draft standing, knowing MLB will subsidize their operations and profits and reward them with access to talented, young labor for cheap. MLB has tried to goose competition in recent years by expanding the playoffs and implementing a draft lottery, but these half-measures don’t address the structural issues of there being no consequences for losing and few rewards for being good but not great.

I suspect a part of the reason why many laypeople think baseball is boring, or that there are too many games, is because most games mean nothing. The B.S. meters in people’s minds start firing off when they put on a game like the Royals-White Sox last September 13 and see whole sections of empty seats, anonymous players going through the motions, and the TV announcers talking about Gone with the Wind by the second inning. I love baseball so much I write about it for free, but you couldn’t pay me to watch that game in full.

Again, the Premier League stands in contrast. The three teams relegated from the top division lose the broadcast revenue, global exposure, and gate receipts of playing with the big dogs. That is an existential blow for any club, let alone one like Everton whose identity is based in part on historical permanence. This infuses every Premier League match with significance, especially those between two teams at the bottom of the table, and the impassioned responses to each game result prove that. Even a game in which, say, Luton Town is expected to be blasted by Arsenal, it’s important Luton Town tries to keep it close because relegation at the end of the season could come down to goal differential. (In fact, Arsenal needed a goal in stoppage time to defeat Luton Town in their electric matchup last month.)

At the top of the table, the spoils go to the Premier League champion, of course, and in recent years not many teams have been able to hang with Manchester City. But all is not lost for other clubs. The five best qualify for European tournaments, with the top four destined for the Champions League. Not only is the Champions League the most prestigious annual football competition in the world, it also offers critical revenue and marketing opportunities for qualifying clubs. A Champions League berth is reason enough for many teams to try, even when they know they will likely be turned into roadkill by the City steamroller.

Competition

Sheikh Mansour of the Abu Dhabi royal family bought Manchester City in 2008 and his profligate spending transformed the club from lovable losers into dominant champions. They bought the best players, built a new training complex, established academies around the world, and modernized their stadium. Or, they invested in winning in a league without a hard salary cap and then they won, which means they make more money to invest in the team to make more money. It’s amazing how that works. 

MLB also lacks a hard salary cap, but team owners believe profits are a birthright. They suppress labor costs, coerce taxpayers into paying for stadiums, and make their richer colleagues subsidize their own operations. The billionaire capitalists who own the teams have, in effect, built socialistic fortifications around their investments. When called out for this, they cry poor and point to their respective media markets, though it doesn’t seem Manchester being a postindustrial town of just 550,000 impedes City’s aspirations. (The Brewers are currently threatening Milwaukee, another postindustrial town of about 550,000, with relocation if the city or state doesn’t pay for a ballpark modernization.)

The closed structure of MLB, then, disconnects financial success from winning, which, the last time I checked, is the point of competition. Journalist Michael Baumann puts a finer point on it in his Wheelysports Substack: “if you can’t make money off owning a professional sports team” in the American sports franchise model, then “you’re too stupid to be rich.”

He goes on to critique that model, which is worth quoting in full:

... the scarcity of franchises in a closed system—no promotion or relegation, no expansion without the consent of the existing owners—guarantees that the value of a team will only go up. So even if you’re too stupid to be rich, you can still sell the team and walk away with billions. Between the NFL, NBA, MLB, and NHL, it’s been more than 40 years since a team went out of business. MLB hasn’t lost a franchise since the two-league system was founded in 1901.

These franchises are a profanation of the American capitalist system. There is no market competition, no risk of losing everything by putting out a product that nobody wants to buy. The league will prop up the most indifferent owner, and if all else fails, the team can always be sold for a profit.

In 2022, NBA Commissioner Adam Silver said his league had considered a relegation system to combat tanking, but eventually dismissed the idea because it would “so disrupt our business model.” Translation: opening the league would immediately devalue and put at risk the incumbent owners’ investments. This is to say opening the league would have introduced competition in American professional basketball.

As for MLB, if it is the truest reflection of the U.S. that we have in sports, as I believe it is, then it’s true in all respects. It is hypocritical and anti-competitive and its profits are realized not through investment in its product but through the financialization of its business. The closed system, backstopped by the league’s antitrust exemption, is “fan-friendly,” insofar as you’re a billionaire cheering on the team you own.