Question

In Europe, soccer leagues have a promotion and relegation system where the teams in the top league with the worst record at the end of the season are relegated to the “minor” leagues and the minor league teams with the best record are promoted to the majors. Sports infrastructure is significantly less extravagant in Europe than it is in the United States with teams having older, smaller stadiums with less amenities. For example, until recently many English clubs had a significant amount of terrace seating, that is large flat terraces without seats generally used as standing room areas. How can the promotion and relegation system explain this difference?

Answer 1

In the US, there is only one soccer league (in all the sports, there is one league only). However, in Europe, there are various additional leagues in soccer. The promotion and relegation system in Europe leads to teams being switched to other leagues based on their performances at the end of each season.

However, the system of promotion and relegation results in financial outcomes, that can sometimes make teams go bankrupt. This is not the case in the US. Thus, there is money constraint within the Europen teams. Thus, there is less money for investment in the sports infrastructure in Europe than the US. This explains the difference.