Azure Pipelines: Passing a variable as a parameter to a template

This works:

azure-pipelines.yml

variables:
  FavouriteSportsTeam: "Houston Rockets"
jobs:
  - template: Build1.yml
    parameters:
      SportsTeam: $(FavouriteSportsTeam)
  - template: Build2.yml
    parameters:
      SportsTeam: $(FavouriteSportsTeam)

Build1.yml

parameters:
  SportsTeam: "A Default Team"
jobs:
  - job: SportsTeamPrinter
    steps:
      - script: "echo ${{ parameters.SportsTeam }}"

I had the same problem with a deployment job within a template where I tried to set the environment depending on a parameter. The template parameter would the receive a run-time variable $(Environment).

The issue was that run-time variables are not yet available at the time the value pass to environment is interpreted. Solution was to not pass the variable in run-time syntax but use the expression syntax ${{ variables.environment }}:

deploy-appservice.yml

parameters:
- name: environment # don't pass run-time variables

jobs:
- deployment: DeployAppService
  environment: ${{ parameters.environment }}
  strategy: [...]

azure-pipelines.yml

- stage: QA
  variables: 
    Environment: QA
  jobs:
  - template: templates/deploy-appservice.yml
    parameters:
      environment: ${{ variables.environment }} # use expression syntax

If you wrongly pass a run-time variable $(Environment) this string is what the deployment job will try to name the Azure DevOps environment. I guess, since this is not a valid name, it will use Test as a fallback name, which then appears in the Environments menu.

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I have written a more detailed blog post about managing deployment environments on my personal website.