If you don't get to the playoffs, you have to start over.
If you get to the playoffs but don't win the WS, you are automatically dropped down one difficulty level and positioned back at the start of the playoffs. (If you failed on Rookie, you have to start over.)
Benefits of this method:
1. Simple and easy to understand.
2. Removes some of the sting of losing the WS.
3. Still requires you to put in a lot of extra time if you fail on your chosen difficulty level, so there's plenty of incentive to win.
4. No extra rewards or "participation trophies."
5. Gives you a reason to "go for it" even when down to an elimination game in the playoffs rather than having to play it safe to avoid getting no reward at all.
6. Will encourage more people to play the mode.
7. Based on my programming background, seems like it would be relatively easy to program and doesn't require any new or special resources, unlike implementing new points systems or whatever.
But you can lower the difficulty on your own... plus rewards are tied to the difficulty... so yeah not seeinig where this would make any lick of sense.