So I'd expect that it will, as you suggest start with say....me (if I was top ranked team -but I'm not)....and it creates a league with my friends but when it goes to create another league with Top Team 2, some of my friends (who are friends with Top Team 2) will appear on it and be pulled out of my league because they have stronger mutual connections.

Single connections to a few friends are too weak to keep them together whereas a web of mutually connected friends is a stronger pull.

In a nutshell, facebook platform friend mapping is used.