Interesting topic... as it relates to a team who loses playing for #1, and then goes on to get beaten badly for a lesser place... I can say from my experience with high school football that yes, when you focus years of your life on a certain goal and then you have done everything you can to obtain that goal and you still fall short that it can be a mental and psychological blow that you may not be able to recover from. You are never preparing to lose, and then play for a consolation prize so finding yourself in that position is difficult to say the least. This sort of thing is only going to happen to the highest caliber of teams. A team who's goal is just to go to a bowl game or win x number of games isn't going to be as crushed by losing as the team who is #1 and their goal is to be undefeated and the sole champion of their league (or world, or sports bar, or whatever).
Of course approaching sports from the position of play to the best of your ability is a good thing. That is the great thing about sports... sometimes the underdog somehow comes out on top. People play above themselves in a ways that others would not have thought possible. Or a team comes together in a way that is greater than the sum of their parts.
I don't know how well this correlates with life though. Life doesnt' seem so dramatic and no one is trying to 'win it all' financially.. well maybe Warren Buffet is, but I mean the rest of the 99% are probably just trying to be 'winners' but aren't really competiting with anyone to be the 'best'. Although I don't know, maybe someone people are competive when it comes to 'life' and I'm just a slacker.
It also occurred to me from my more recent experience playing softball there are really 4 outcomes to a sporting event.
You play your best, and you win (Great feeling, your hard work and preparation has paid off)
You play poorly, and you win (A hollow victory, real competitors don't feel good when this happens, you may need to move up to another level if this happens to often)
You play your best, and you lose (Can be painful, but there is often a satisfaction that you couldn't do anymore than you did. makes you want to try harder. Compeitive people will mark their calendars for the rematch.)
You play poory, and you lose (Discouraging, is bad for morale when it happens too often, means you need to PRACTICE more, or consider changing sports, or find a less compeitive / more recreational level of play.)
Sorry, one more thing
SHAKE AND BAKE!