Development
Closed leagues developed in North America during the 19th Century because of the distances between cities, with some teams separated by half of the North American continent, resulting in high traveling costs. The National League of Professional Base Ball Clubs was established in 1876, and its founders determined that they must make baseball's highest level of competition a "closed shop", with a strict limit on the number of teams, and with each member having exclusive local rights. This guarantee of a place in the league year after year would permit each club owner to monopolize fan bases in their respective exclusive territories and give them the confidence to invest in infrastructure, such as improved ballparks. This in turn would guarantee the revenues needed to support traveling across the continent. In contrast, the shorter distances between urban areas in England allowed more clubs to develop large fan bases without incurring the same travel costs as in North America. When The Football League, now known as theCommon features
Revenue sharing
Closed leagues often feature a form of revenue sharing, where forms of revenue are shared equally by all teams, regardless of team performance or a team's number of supporters.Salary caps
Closed leagues often feature salary caps in order to control labor costs and create a more level playing field among its competitors by preventing rich teams from paying the best players salaries that poorer teams cannot match. Salary caps can be "hard", in which case they cannot be circumvented, or "soft", where teams may go over the salary cap in certain cases, but may be penalized financially for doing so.Draft
Closed leagues often feature drafts to assign new talent and promote competitive parity by giving teams with good records late picks in the draft while poor performing teams benefit by having good early picks to select talent. Often, closed leagues have a draft lottery to discourage tanking.Debate
Closed league systems have been subject to debate over whether the system creates better and more fair competition in comparison to open leagues, and whether they are more financially viable.Arguments for
Proponents for closed leagues often argue that this system leads to more financially stable and profitable teams and creates less risk for owners due to teams not needing to spend money in order to stay competitive to avoid relegation to a lower league or qualify for tournaments. The world's three most valuable sports teams are American teams playing in closed leagues. In addition, proponents of closed leagues also argue that the system creates more competitive balance in a sports league, because teams cannot "buy" a championship and because there is less of an imbalance between the richer and poorer teams in the league, while not impacting the skill ceiling that the league hopes to achieve.Arguments against
Opponents of closed leagues argue that there are more games where something is "at stake" in a promotion and relegation structure, which could increase interest in the league's games. In addition, opponents argue that a closed system leads to teams tanking in order to receive better draft picks. Opponents also argue that a promotion and relegation system increases competition in the different levels of the sporting pyramid, which can further player development and lead to more ambitious strategies from team owners.Analogies to Socialism
In recent years commentators have noted that structure of closed leagues in North America is "socialist" in comparison to the "capitalist" open leagues in Europe with it emphasis on creating an equal completive and financial playing field for all teams in a closed league in comparison to open leagues favoritism of rich and successful clubs who often generate more revenue and achieve more in the sport as a result. However people have argued that this socialist structure is a reflection of theSee also
*References
{{League systems Association football terminology Sports terminology