I hope the following relates to all setups:
SMFA Competitions
Each season there will be two cup competitions run by the SMFA which involve clubs from each of the different leagues that run throughout the setup. The setup contains the SMFA Champions Cup and SMFA Shield cup competitions. Because it involves clubs of all standards playing against each other there is the possibility for "minnows" from the lower divisions to become "giant-killers" by eliminating top clubs from the cups.
SMFA Champions Cup:
The elite tournament within Soccer Manager is the SMFA Champions Cup. This tournament involves the top 32 teams from across the 12 leagues who have qualified through their league position: England(4), Spain(4), Italy(4), Germany(3), France(2), Scotland(2), Holland & Belgium(2), Eastern Europe(4), American(4), Mediterranean(2), Central Europe(2), Scandinavia(2) and the current holders.
The tournament is split into two stages. First, a group stage involving 32 teams. The teams are drawn into eight groups of four teams (Group A through to Group H), with each team playing every other team in the group twice (home and away). Points are awarded as follows: 3 points for a win, 1 point for a draw and 0 points for a defeat. The top two teams with the most points after 6 matches qualify for the knockout stage. Second, the knockout stage involving the 16 qualified teams from the group stage. The pairings for the knockout stage is drawn completely at random - there are no seeds, and a draw takes place after the fixtures have been played in each round. If the match is a draw after 90 minutes have been played, then penalties are used to decide who will progress to the next stage of a tournament, or who will win it.
SMFA Seeding:
This is in two stages:
First, each club which qualifies for the opening group phase of the SMFA Cup will be seeded accordingly, and this will mean equally-matched teams will avoid each other until the latter stages;
Second, group winners in the opening phase of the SMFA Cup will now play a runner-up from another group in the first knock-out round, and this will rewards the group winners for their performance in the SMFA Cup during the group phase.
SMFA Shield:
The second most prestigious tournament within Soccer Manager is the SMFA Shield. This tournament involves 64 teams from across the 12 Leagues who have qualified through league position or winning the domestic cups: England(

, Spain(

, Italy(7), Germany(6), France(6), Scotland(4), Holland & Belgium(4), Eastern Europe(4), American(4), Mediterranean(4), Central Europe(4), Scandinavia(4) and the current holders.
The tournament is in a knockout format with pairings drawn completely at random - there are no seeds, and a draw takes place after the fixtures have been played in each round. If the match is a draw after 90 minutes have been played, then penalties are used to decide who will progress to the next stage of a tournament, or who will win it.
Please Note:
If a player plays in either the SMFA Shield or Cup and moves clubs he will be ineligible to play in the competitions for his new club.
Each respective league is only allocated a certain number number of SMFA Cup and Shield places. The number of places will always remain the same and will not change even if a club from that respective league wins either competition. e.g. In the English League Liverpool finish 10th but win the SMFA Cup. Liverpool as holders will automatically qualify for the SMFA Cup. Due to England only having four places allocated for the SMFA Cup, this will mean that the team finishing fourth will miss out on qualification.
The above information can vary from Gold Championship to Gold Championship and for information regarding the setup you are currently participating in please read 'Setup Rules'.