Back in the 1990s Major League Baseball in the United States was dominated by big teams. Their revenues meant that there was a large and growing revenue disparity creating what was called “a chronic competitive imbalance”. The result of this was a decision in 1994 to introduce revenue sharing in order to give small earners the chance to be more competitive. It is a complicated story because much of baseball’s earnings are localised and the size of the home town influence a team’s ability to earn. In order to solve this every team pays 31 percent of its net local revenue into a fund and that money is divided up and equally distributed to every team. In addition to this a large percentage of MLB’s central fund (from TV rights sales and so on) is allocated to teams based on their revenues. In addition there is what is known as a “luxury tax” which means that big teams have to pay MLB if their payrolls go above a certain limit. These are set high so that only the biggest teams are affected. It is reckoned that the revenue differential between the teams has halved as a result of these measures, which mean that smaller teams can compete more easily with the bigger operations. There are lot of other rules about recruiting but if one looks at the results it is clear that they have had an effect. Between 1996 and 2000 the New York Yankees (the biggest team by a long way) won the World Series four times in five years. Since then the Yankees have won only once (2009) while no team has won more than three titles, the most successful being the Boston Red Sox that won in 2004,2007 and 2013, the St Louis Cardinals have won twice (2006 and 2011), as have the San Francisco Giants (2010 and 2012), but other teams such as the Florida Marlins, Chicago White Sox and Philadelphia Phillies have also had a look-in, creating a more interesting sport as a result.
Creating any kind of revenue-sharing system is not going to be easy because it is not in the interest of the winners to help out the losers, but the sport would be healthier if they did.
Having said that, the sport would be healthier too if it did not give half of its revenues away to financiers with no interest in the sport. The primary goal for F1 would logically be to reduce the promoter’s percentage to something a little more reasonable (15 percent is a more normal figure) and then sort out how to split up the pot in a sensible fashion. The trouble with this is that such changes require good leadership and at the moment there is no leader to compete with Bernie Ecclestone>
MLB’s solution is to have an all-powerful commissioner figure, who does the deals on a fixed-term contract. He is chosen by a vote of the owners of the teams and is then left alone to run the business until the next vote.