re: Why do teams drop in ranking after losing to a higher ranked team?

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Because it changes your overall win/loss record.

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So the goal is to simply have the best record? Why even play tough games? AU could go independent and schedule all conference USA teams and get in the playoffs every year.

If team A is ranked 11 and plays every team ranked 1-10 and loses all of them how did we prove team A wouldn't run the table against teams ranked 12-20?