Promotion and relegation The promotion and relegation system is a process that takes place at the end of the season that transfers teams from a division to another . This system have the best team ( s ) from a division promote to the next highest one , in replacement for the worse one ( s ) from that same division , who are relegated to take the place of those teams in the lower division . This process may continue down through many levels ; between division 1 and 2 , 2 and 3 , 3 and 4 and so on . Usually , the number of teams promoted to one league is equal to the number of teams relegated from it . In some cases , it is not true ; this is usually due to league restructurations , or to changes in membership sizes if the league lost one or several members due to bankruptcy . This system is characteristic of European hockey . While several leagues adopted the North American closed league model in recent years , traditionally , European leagues have usually used the promotion and relegation system . Its main advantages over the closed league one is that it maintains a hierarchy between the various divisions and teams within a country and ensure that , even for the worse teams , every match played is important , as they may be at risk of relegation and may want to avoid falling down one division ; in closed leagues , the lower teams not only do not gain anything from trying to avoid finishing last , but they may even gain a lot - in North America , the worse a team ' s standing is , the higher the team will pick in the draft . The system also has one major downside : the potentially severe economic hardships or even bankruptcy that may be triggered by a relegation to a lower level . Some leagues will counter this effect by offering what is called " parachute payments " , i . e . a sum of money given over the following year ( s ) to the demoted team to ensure its finances stay afloat . Promoted teams also receive financial support to help them being competitive at their new level . Teams who gain promotion by their performances on the ice may not necessarily be granted access to the higher level ; some leagues require those teams to satisfy several non - playing criteria as well , such as financial solvability , stadium facilities and general quality of the facilities . Teams failing to satisfy these conditions can see themselves stripped from their access to the upper division and the promotion may be awarded to a team ranked below the first one , or even be canceled for the season , leaving the former last - ranked team of the upper level in place for the next season . Qualifying rounds . In some leagues , qualifying rounds are part of the process . These rounds oppose the lowest ranked teams of the higher level to the best ranked teams of the next lowest ( number of team depends on the leagues ) . These rounds have two main advantages : they mean some extra gate receipts for the teams involved , and they ensure that the level of competition in the leagues involved is balanced , by preventing a too weak team from promoting to a higher league and a too strong one from relegating , in case the lowest ranked team of the higher league is still stronger that the highest ranked team of the lower league . One example of such qualifying rounds is the Kvalserien in Sweden . International level . In hockey , the promotion and relegation system also applies to the World Championship s .