There is no one way that works best for all designs. It really comes down to which mode looks best tin the specific design layout you are creating. Generally, you will use modes X or XM. In some cases, you may even mix the modes. So for example, you may want the team name in X to always take up the exact full width. However, you may use mode XM for the name and allow the space to reduce for smaller names instead of stretching.
If you are using resize mode “X” then use a 6 letter name as this is the average. I like to put in XXXXXX in the layer as the are average size characters. This centers the name size to the average so that it avoids extreme stretching or compressing. The worst case is usually 3 letter name which with stretch 200% which surprisingly doesn’t look so bad. A 2 letter name would stretch around 300% though and will look pretty rough, especially if one of the letter is “i”, Li for example.
For mode “XM”, it will only compress an not shrink. So you can still use XXXXXX, or you can addd more characters and use XXXXXXXXX for example, Adding more letters would reduce the number of times it has to compress. However, it will also increase the empty space left over too for when it doesn’t compress because this mode will never stretch.