Kane's floor
While the first year students were engaged in their own school rank battle, similarly, the other students from the higher class were equally engaged in a battle of their own.
In the second year battle arena, the set up was quite different from the one that the first year students had. Although they walked through their own teleporters as every other year had one designated to them that took them to a distinct location.
This was done so as to avoid any form of clash. It was already an established and well known fact that those in the higher classes were exponentially stronger than those in the lower class. As such, the need for a power rank was brought up.
The power ranking wasn't an invention of the academy. Even in the real world, ranking systems were put in place at organizations and other places where there was a need to establish some level of heirachy.