Like many other markets, sports rely on a hierarchical structure of governance. It is the so-called “pyramid system”, a chain of command that dictates the rules and procedures within the sporting modality; the organisations on top determine how (almost) everything works, and, those below do what they’re told.
To paint a clearer picture of the Pyramid system, I’ll use the example of football, the most economically relevant, international, sporting market. FIFA (Fédération Internationale de Football Association) sits on top of the pyramid. It is the supreme authority when it comes to football, and determines the basic guidelines and rules within organised football. I’m not talking here about the laws of the game itself – FIFA are not the ones to say whether the game shall be played with 11 players per team or to have two periods of 45min each.
FIFA’s scope extends to:
- The set of rules involving competitions, transfers, players’ registration and other market-related matters.
- To organize the World Cup (both Men’s and Women’s) and the Club World Cup. (Perhaps its main source of power)
- To act as a dispute resolution body, if certain conditions are met.
Underneath FIFA, we have the continental federations: CONMEBOL (South America); UEFA (Europe); CONCACAF (North and Central America and Caribbean); AFC (Asia and Australia); CAF (Africa) and OFC (Oceania). Their main function is to organise continental tournaments between both clubs and national teams. However, they also play a strong regulatory role, for example, implementing financial regulations such as UEFA’s Financial Fair Play or AFC’s rule that obliges the Asian clubs to have an ambulance present at official training sites, both regulations applicable to each club within their jurisdiction.
Underneath, we’ve got national associations, such as CBF (Brazil), AFA (Argentina), FA (England), RFEF (Spain), so on and so forth. They’re responsible for organising competitions at a national level; usually, that means the national league (at least, the top division), one or more national cups and some of the national youth-team club competitions. When it comes to regulatory power, they’re also very active; they regulate all domestic matters however they see fit, as long as they implement the mandatory FIFA rules. It’s also important to mention that, in several countries, the clubs have created private leagues and made deals with the associations, so that they get to manage the main tournaments.
Then we have regional federations, which are not present in every country. They organise local tournaments – such as the State Championships in Brazil – and don’t really have much leverage when it comes to deciding on regulatory matters, considering that:
- They are branches of the national associations, and
- Their competitions are not as relevant as the national ones; sometimes they’re not even considered official.
At the bottom of the pyramid, are the clubs, athletes, coaches etc. Ironically, these are the groups that actually make football happen but are bottom of the food chain; they only get a say when they are united and aim for the same goals – when clubs create leagues, when athletes create unions, and so on.
The idea of the “pyramid system” is to regulate sport from top to bottom, making it as uniformed as possible worldwide. You may ask: “OK, but what if I’m a club or footballer and I want to do football my own way?”. Well, it’s FIFA’s way or the highway! Most modalities (especially football) are already consolidated in this kind of hierarchical structure, and, if you don’t abide by the rules, your chances of failure are enormous – you’ll probably be kicked out of organised sport.
Unless you want to isolate yourself from the rest of the world within your modality, like they do in the US, I wouldn’t do anything that goes against the pharaohs on the top of the pyramid. It works for the Americans in most sports, but I wouldn’t recommend trying to copy it; and, despite all the critics, the “pyramid system” actually works quite well.