I don't think this would work for professional sports. Most major professional sports teams are located in the biggest cities where they can sell the most tickets whereas minor league or developmental teams tend to be located in smaller cities and have smaller stadiums. Obviously there are exceptions but in general it would defeat the purpose, at least financially. However, I could see this working for college sports, where for example the best Division II teams move up to Division I or the worst FBS football teams move down to FCS. With all the conference realignment these days, conferences don't seem to mean much anymore so the teams could just get put into new conferences based on geographical location. However, I believe the way the NCAA currently operates is that if a school wants to be Division I, it must either have just one Division I sport, or all of its sports must be Division I. That seems like a strange rule that could easily be changed to me.
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