Did revenue sharing create parity in MLB?

Sports economist Dave Berri says no.

 Commissioner Bud Selig tells us that the 2002 agreement has ushered in a “golden age.” If by “golden age” he means an era of pay equality and competitive balance, then the data doesn’t seem to agree. Team payrolls are even less equal today and the level of competitive balance appears to be about the same.

The reality is that competitive balance improved in baseball during the 2oth century as the population of available athletes expanded. And the improvements occurred well before the 2002 agreement. For the mechanism of how this works, please read chapter four of The Wages of Wins (shameless book plug, sorry about that). Or perhaps I will comment on this at our blog – The Wages of Wins Journal (another shameless plug, sorry again). In the last thirty years the standard deviation of winning percentage in both leagues has changed very little. Yes, payrolls have increased dramatically, but competitive balance remains basically the same.

So is this a “golden age” of baseball? If by “golden age” we mean the Yankees are not winning the World Series every year, then I guess that is true. But one should not be confused about how that trick was pulled off. The true trick happened when baseball expanded participation in the playoffs. Since 1995 the team with the best record in baseball has only won the World Series once. And that is because the best team now has to navigate three playoff rounds to win the title.

The revenue sharing plan, which put more gold in the pockets of small market teams, may have made the lives of some owners come closer to a “golden age.” But it is hard to see how this altered the level of parity we observe in the National Pastime.