From the wiki:

"Manager Level

The Manager Level represents the manager's experience and success. Whenever a manager ends the League between (and including) 1st and 7th place, he advances one level. Advancing a level usually puts the manager against more demanding opponents and sets higher standards for players. It is possible for managers of different levels to play against each other. Being a lower level manager paired up against higher level managers doesn’t necessarily give a disadvantage, as opponents are also paired up based on quality. "