In 1999, a “blue ribbon” panel commissioned by MLB concluded that “large and growing revenue disparities exist and are causing problems of chronic competitive imbalance. Year after year, too many clubs know in spring training that they have no realistic prospect of reaching postseason play.”

The panel’s report was a litany of those disparities and a summation of that imbalance:

Revenues: Because of faster growth rates on already larger revenues, by 1999 the top seven teams averaged more than double the revenues of the bottom 14 teams.

Payrolls: The ratio of payroll spending by the top seven revenue teams versus the bottom seven went from less than 2-to-1 in the 1980s to 3.5-to-1 in the 1990s.

Competitive Balance: During those five seasons in the late 1990s, none of the 14 teams in the bottom half of payroll spending won even one of the 158 postseason games played. Every World Series was won by a team with one of the top seven payrolls.

See also: “The Report of the Independent Members of the Commissioner’s Blue Ribbon Panel on Baseball Economics, July 2000,” MLB. (PDF download)

Such revenue disparities accelerated in the 1990s as bigger-market teams began setting up their own Regional Sports Networks on cable TV, profiting directly from subscriber fees and ad sales while other teams began to benefit form the first wave of new stadiums, notes Andrew Zimbalist in May the Best Team Win.

To fix this problem, the panel recommended a break in more than a century’s worth of tradition, imposing significant revenue sharing. After hashing out their competing interests, large-market owners, small-market owners, and the players’ union initially struck a major revenue sharing deal during collective bargaining in 2002. Under the latest version, in effect through 2011, all teams pay in 31 percent of their local revenues and that pot is split evenly among all 30 teams. In addition, a chunk of MLB’s Central Fund — made up of revenues from sources like national broadcast contracts — is disproportionately allocated to teams based on their relative revenues, so lower-revenue teams get a bigger piece of the pie.