With about a month's worth of matches left on the European professional soccer calendar, this past weekend featured movement in several increasingly tight title races. In England, London's Chelsea lost to Manchester United, dropping valuable points as it tries to fend off a late season surge from cross-town rivals Tottenham Hotspur; Spain's Real Madrid notched its 23rd win of the season, maintaining a narrow lead in the standings over perennial enemies Barcelona. There was also excitement at the bottom of these leagues, featuring teams that had no shot at the championship but were instead fighting for survival and the right to simply remain in the top level of competition for next season. Wrapping up underwhelming seasons, clubs such as England's Sunderland and Spain's Osasuna face a very real risk of being dropped into a lower level of professional soccer for 2017-18 (more on how this works in a moment).
On the other side of the pond, the weekend brought the annual fanfare of the NBA playoffs. In the weeks prior, about two-thirds of the league's teams found themselves in the throes of competition, jockeying for seeding. Of the remaining third, some lamented their inability to secure enough victories to qualify for the playoffs. A few had particularly bad years, playing the last month of games knowing that they were mathematically eliminated from the possibility of post-season plays. And then there were the teams that strategically tanked, such as the Phoenix Suns and the Los Angeles Lakers. (Of course, neither team would explicitly admit to tanking; having a "rebuilding year" is the preferred euphemism.)
In the context of sports, to tank is to deliberately lose. It's not quite match-fixing or "throwing" a game to rig a gambling result; instead, tanking usually consists of an intentionally weak effort in pursuit of a sporting outcome. In some instances, the practice is frowned upon as unsporting but isn't considered a violation of the formal rules of a sport. For example, a tennis player down 5-0 in the first set might tank the final game of the set to conserve energy and attempt a comeback in the following sets. But tanking doesn't necessarily go unpunished, as in the case of Olympic badminton players from China, Indonesia and South Korea in the 2012 London Games. In this case, four pairs of female athletes were accused of deliberately losing first-round matches; having already qualified for the next round, they hoped to play weaker competitors in the quarterfinals. The Badminton World Federation considered the behavior "match-throwing," disqualified the teams from the tournament and rejected their appeals for reinstatement.
Turning our attention back to professional basketball, tanking seems like a strange practice, especially in an American sporting culture that values the crucible of hard-fought competition and playing to the final whistle. After all, as the legendary Green Bay Packers coach Vince Lombardi taught us, "Winning isn't everything, it's the only thing." But in recent years, especially in the NBA, the idea of a team tanking its season has become an accepted — and almost expected — feature of professional sports in the United States.
When Losers Win
This behavior is driven by a curious structural reality: In American professional leagues, there is no cost for performing poorly and finishing at the bottom. In fact, there is a reward! The exact process differs a bit from league to league, but in the simplest terms, in the NBA, NFL and NHL, the worst teams are entitled to the first picks in the amateur player draft the following season. This is done in the interest of some nebulous idea known as "parity," but it doesn't take an economist to recognize the irony. In American sports — our most bountiful source of metaphors for free market competition — the norm is actually bright red, redistributive socialism: Fail to compete and reap the spoils.
Like so many things, the rest of the world does it differently. From Europe to South America, from the top soccer leagues to niche competitions such as pro women's volleyball, the norm is a system known as "promotion and relegation." In this system, the worst teams at the end of the season (typically the bottom three finishers) are demoted to a lower level of competition, replaced by an equivalent number of top finishers that are promoted to the higher level for the following season. Yes, in many bastions of social democratic welfare, there is a cost to losing.
Of course, promotion and relegation take place in national league structures that are fundamentally different from their American equivalents. In what is often referred to as the national pyramid, the best professional leagues outside of the United States sit at the top of a tiered system of permeable divisions through which teams rise and fall. For example, in Italian soccer, the top flight is Serie A, the second is Serie B, and so on, with the same structure encompassing even the smallest, amateur leagues. Though an unlikely proposition, it is wholly possible that a neighborhood club in Puglia could string together enough winning seasons to end up in Serie A. If a giant of the sport, such as Turin's Juventus, were to fall on hard times, it might plummet down the ranks.
In contrast, U.S. leagues are closed systems; players move up the ranks, but teams don't. Though there are lower levels of professional competition, such as baseball's minor leagues and the NBA's developmental league, the teams that compete there are subsidiary affiliates of the top professional teams. Hence, there is no mechanism for the Pawtucket Red Sox to replace the Boston Red Sox, nor would it really make any sense. Going further down the developmental ranks to the amateur levels, the structural differences are even starker, with U.S. high schools and universities serving as the de facto developmental incubator for elite sports. With few exceptions, in the rest of the world, competitive sports remain firmly outside of the school system, with dedicated sporting clubs (both amateur and professional) as the norm. Whereas an American football player emerges from his local high school, to the state university and on to the New York Giants, his equivalent in English soccer will simply rise through progressively larger clubs en route to Manchester United.
A Better Way
The evolution of this current state of affairs is a complex history for another day, but some of its contemporary implications are worth noting. Having gone through decades of competition and consolidation (and some favorable court decisions in matters such as labor and antitrust), professional leagues in the United States became legal cartels in the second half of the 20th century. And like any good cartel, why would you give up a good thing? With the number of franchises fixed and the barriers to entry sky-high (really, next to impossible), team owners collectively bargain for a monopolistic position on everything from media rights to player salaries. (Yes, in purely economic terms, basketball and football players are underpaid.) Leveraging the threat of relocation and citing bogus economic impact projections, team owners have famously put pressure on municipalities to foot the bill for stadium construction projects that seldom pay off for the local citizenry. Though there has been some pushback from public stakeholders in recent years, clever financing approaches and fanatical devotion to the home team continue to fund new stadiums with voters' dollars. To be fair, it's not as if non-U.S. professional clubs are angels: Soccer teams exploit the talent pools of the developing world, and media rights deals create absurd scenarios where local fans can't watch their home team on television.
In the closed-circuit American system, regular-season play is a preamble to playoff tournaments. The playoffs are inevitably exciting and the highlight of the season but are essentially another socialist redistribution: Finish the regular season in 16th place out of 30 teams and we'll reset things, giving you a chance to be the champion.
In purely competitive terms, the global model is more pure and often more interesting. While new teams in U.S. leagues are a tightly controlled rarity, the promotion-relegation system allows for enterprising investors to buy a lower-level club and try to move it up the ranks through shrewd (sometimes belligerent) investment and creative decision-making in personnel and tactics. Out of the boardroom and onto the field, the promotion-relegation system tends to also generate a fair amount of entertainment. Faced with the threat of relegation and the accompanying loss of revenues and prestige in the closing weeks of the season, teams at the bottom pull out all the stops in an attempt to survive. American teams in the same position often have fire sales, offloading talent to teams that are playoff bound, or they quietly tank, hoping to rebuild their rosters with their loser's bounty. (This point brings up another layer of competitive divergence: playoffs! In the promotion-relegation system, teams earn points by winning, and the final league positions are determined by season-long point totals. In the closed-circuit American system, regular-season play is a preamble to playoff tournaments. The playoffs are inevitably exciting and the highlight of the season but are essentially another socialist redistribution: Finish the regular season in 16th place out of 30 teams and we'll reset things, giving you a chance to be the champion. Imagine Wal-Mart sending Target a subsidy in early November, for the sake of parity in the holiday playoffs.)
Of course, of course, I get it. The consumer-fans aren't revolting and the major American leagues remain the pinnacle of competition in their respective sports; meanwhile, the owners get richer and have nothing to complain about. Things seem too entrenched to expect any real change, but it's nice to dream of a world where baseball teams don't offload half their rosters after the all-star break, where every game in the NFL season actually matters, and where my beloved Lakers have no market incentive to play to lose.