Dr. Michael Lewis penned this NY Times op-ed last weekend in which he asserts that Major League Baseball’s present revenue-sharing formula does little to affect the quality of the various teams on average, even though small market teams do well now and then:

The Colorado Rockiesí appearance in the World Series last month may have looked like evidence of success for revenue-sharing. Like the Oakland Athletics, the Minnesota Twins, the Detroit Tigers and the San Diego Padres last year, a small-market team proved competitive enough to reach the playoffs. But revenue sharing, as it is now structured, actually makes lasting success less likely for all five of these teams. [. . .]
Since 1998, millions of dollars have been transferred from richer teams to poorer ones in an attempt to let all teams share in the economic advantages associated with playing in big markets ó a large fan base, lots of press coverage and lucrative local cable television contracts. Last year, more than $300 million was transferred.
Yet since revenue sharing began, at least one team from each of the big four markets ó New York, Los Angeles, Chicago and Boston ó has appeared in every World Series except 2006. In the 10 years before 1998, in contrast, only two Series included one of those big-market teams.
The problem is that the teams receiving payments have come to use them as a primary source of income ó rather than to build winning teams. . .

As John Palmer sums up:

Revenue sharing has little impact on the expected marginal revenue and marginal costs of ticket sales, and it especially has little impact on the expected marginal revenue product and marginal factor costs of hiring more talent for the team. As a result, many teams like, say, Tampa Bay, respond to what is essentially a lump-sum transfer by pocketing the extra cash. [. . .]
So revenue-sharing also reduces the marginal revenue of an expected win, and not just for the big-market teams that are taxed to support the programme; it also reduces the incentive for small market teams, the recipients of revenue-sharing, to win too.