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What I did with my P/R league was pretty simple: I just cut the minor league teams loose from their parent clubs and turned on the reserve roster system. Whichever players they had on their roster at the beginning of the season were theirs, congratulations. That means there's a shot that some of the big-time prospects stay in the lower tiers and makes those leagues a little more interesting.
My tiers were 28 teams apiece with no divisions. 162-game schedules meant 6 games against everyone else. Four teams were relegated/promoted at the end of the year. Very clean.
Now if you were to do a draft in a P/R league... I have some thoughts on an imperfect system:
Top tier gets the draft. It's a short draft, maybe 5 rounds, but this ensures that the top tier gets rewarded for being in the top tier. However, if you get relegated, you don't get to be in the draft. So the top 4 teams (using my previously mentioned system) of tier 2 get thrown into the draft, in the order they finish. So the top 5 picks would go like this:
1. Tier 2, #1
2. Tier 2, #2
3. Tier 2, #3
4. Tier 2, #4
5. Tier 1, #24
This rewards the 2nd Tier teams for winning and makes the crappier Tier 1 teams stronger as well. The relegation system makes it too risky to tank, and it gives the promoted Tier 2 teams a chance to get on even ground with the lower teams in their new league.
Also, trading between leagues is allowed and if you can, let teams trade picks in the draft to lower league teams (that way, high level guys stuck in lower leagues can be traded up for a chance at the draft).
I could throw another complication in there by requesting that the draft order for the unrelegated Tier 1 teams be compiled according to the Gold System... but theoretically the year-to-year threat of relegation combined with a short draft should be a strong enough deterrent to win at the end of the season.
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