How League Structure Shapes Behaviour: Evidence from Regulatory Changes in Mexico and South Korea

This paper estimates the causal impact of entry regulation on organisational behaviour and market outcomes by exploiting two natural experiments in professional football. It examines the consequences of transitioning between a promotion-and-relegation system and a closed league in Mexico’s Liga MX and South Korea’s K-League 1. Using a difference-in-differences strategy, the analysis compares the evolution of match-level outcomes in the treated leagues with those in suitable control groups—Brazil’s Brasileirão and Japan’s J-League. Closing the league in Liga MX reduced competitive balance—matches became, on average, less close—lowered stadium attendance by around 40%, and decreased global search interest by about 8 Google Trends points, while also making managerial replacements less effective. Introducing promotion and relegation in the K-League 1 increased competitive intensity and enhanced the efficacy of managerial changes. Together, these findings provide the first causal evidence on how league design shapes incentives and behaviour in professional sports, with broader implications for industries where performancebased entry rules influence organisational strategy.