Sport franchising

Professional sports leagues are organized in numerous ways. The two most significant types are one that developed in Europe, characterised by a tiered structure using promotion and relegation to determine participation in a hierarchy of leagues or divisions, and a North American originated model characterized by its use of "franchises," closed memberships, and minor leagues. Both these systems remain most common in their area of origin, although both systems are used worldwide.

The term league has many different meanings in different areas around the world, and its use for different concepts can make comparisons confusing. Usually a league is a group of teams that play each other during the season. It is also often used for the name of the governing body that oversees the league, as in America's Major League Baseball or England's Football League. Because most European soccer clubs participate in different competitions during a season, regular-season home-and-away games are often referred to as league games and the others as non-league games, even though the separate competitions may be organised by the same governing body. Also, there is a rugby football code called rugby league, which is distinct from rugby union.

Professional sports leagues in North America comprise a stipulated number of clubs, known as franchises, which field one team each. The franchises have territorial rights, usually exclusive territories large enough to cover major metropolitan areas, so that they have no local rivals. New teams may enter the competition only by a vote of current members; typically, a new place is put up for bid by would-be owners. This system is often called a "franchise system." It was introduced in baseball with the formation of the National League in 1876 and later adopted by the other North American leagues.

Although member clubs are corporate entities separate from their leagues, they operate only under league auspices. Partly because that relationship is so close, and partly because the four major team sports leagues represent the top level of play in the world, North American teams almost never play competitive games against outside opponents. National Hockey League (NHL) and National Basketball Association (NBA) teams have played against European hockey and basketball teams in preseason exhibitions. The North American league, rather than any sport governing body, determines the playing rules and scoring rules of its game, and the rules under which players join and change teams.

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