The Pirates pocketed $69 million in revenue sharing and made $29 million in profits as they lost 189 games between 2007 and 2008. The Marlins reportedly made $300 million in revenue-sharing checks from 2002 through 2010. When faced with a formal grievance from the MLB Players Association, the club agreed to put all revenue-sharing money towards player salaries and development. Shortly after the end of the 2012 season, when the agreement expired, the Marlins promptly traded away all but one player on their roster making more than $1.6 million (the lone exception, Ricky Nolasco, was gone before the trade deadline).

Part of this is because Major League Baseball teams are run by snakes like Jeffrey Loria and Bob Nutting, of course. But part of it is a structural problem with the way baseball’s revenue-sharing program is designed, to the point where it actively incentivizes failure. Instead of creating a rising tide that lifts all boats, revenue sharing has instead acted to make teams into spendthrifts regardless of where they fall on the revenue spectrum.

The problem comes from the system’s use of actual revenues to calculate who pays in and who gets a payout from the system rather than a measure of potential revenues — something akin to market size that accounts for structural differences in team revenue rather than rewarding a team that is simply failing to earn because it is poorly run. The best illustration of the absurdity this system can produce is the 2005 revenue sharing numbers, in which the Philadelphia Phillies — in the fourth-biggest media market in the league and the largest market without a second team — were paid out $5.8 million.

(If you’re interested in deeper proof of this concept, William Colby, an Amherst graduate who has also worked in the Rays front office, published a paper in 2011 analyzing the actual impacts of Major League Baseball’s revenue-sharing programs. It attacks the problem from both a theoretical and empirical angle to prove MLB’s program creates disincentives for teams to spend and actually increases competitive imbalances.)

By creating a system in which increasing revenues by buying talent and winning games actually reduces profit margins, Major League Baseball instead created a disincentive to spend. I have a hard time believing this was an accident, considering the recent changes made to the draft and the international talent market. The institution of hard slotting in the draft and spending limits in the international market act the exact same way, levying huge penalties on every dollar spent over the limits in both cases.

This has made it tougher for teams like the Brewers to dive into the international market or gamble in the draft. But the Yankees? Assigned a $2.2 million cap on international spending in 2014, they went out and spent nearly seven times that, $14.4 million. The $12.31 million in taxes levied on the Yankees as a result would be anathema to most teams, but to the Yankees and their structural advantages, it’s a pittance.

The result is the exact opposite of what these programs are supposedly trying to accomplish. Instead of creating a more competitive game in which teams aren’t limited by structural disadvantages, teams are economically encouraged to lose as cheaply as possible and reap the rewards of revenue sharing until a short competitive window emerges as a result of their many years of top draft picks.

It might sound counterintuitive, but that’s mostly because we’ve been inundated with Bud Selig’s small-market idealism for some three decades now. It was easy to sell because it was what we all wanted to hear — that our teams weren’t losing because they were incompetent, but because the odds were stacked against them. As nice as the logic sounds, though, it has proven to be broken both in theory and in practice.

Last week, I took a look at the beginning of Bud Selig’s fight for “small-market” franchises 30 years ago. “These negotiations were a fight for the Milwaukees of the world,” Selig told the Milwaukee Sentinel. “In the end, Milwaukee was the only franchise being mentioned.”

Selig and his coalition of small-market owners deposed Fay Vincent and installed Selig himself as acting commissioner just seven years later, in 1992. The next year, Selig and his group flexed their muscles and proved they were serious about forcing the big-market owners to seriously consider a revenue-sharing program.

In the early 1990s, “superstations” like Chicago’s WGN and Atlanta’s TBS were making baseball games widely available on television outside of a team’s home market for the first time. Both New York teams also had games broadcast on superstations — WPIX for the Yankees and WWOR for the Mets. In 1993, as the game’s collective bargaining agreement approached expiration the next year, small-market owners took aim at these sources of revenue for big-market teams through a little known clause in a decades-old contract.

The distribution of funds from local and cable telecasts was dictated by agreements dating back to the mid-20th century, 1956 for the National League and 1965 for the American League. Each league distributed the cash slightly differently — American League teams with superstations shared 20 percent of the revenue with the rest of the AL, and National League teams shared 25 percent of the revenue from each game with that game’s road team. The agreements contained critical clauses, according to the Sentinel: Each can be terminated when five teams in a league give notice. Without these agreements, small-market teams would have the right to block superstations from broadcasting any games in which they are involved. The result would be a substantial loss of revenue for the superstations which needed the baseball money to survive.

The Milwaukee Journal reported that San Diego, Houston, Pittsburgh, Florida, Montreal, St. Louis and Cincinnati all supported the blackout in the National League, and seven teams including the Brewers and Twins backed the blackout effort in the American League. This rift in ownership made things awkward for Selig, and the Sentinel report shows the absurdity of his attempt to act as neutral commissioner and Brewers owner at the same time.

The article read, “Interim commissioner Bud Selig, president of the Brewers, was reluctant to discuss the situation. His small-market team supports the coalition, athough as acting commissioner, he is required to appear impartial.”

Selig did say, “I wouldn’t make too much of this. I don’t think it’s an issue of leverage as much as the clubs taking a new look at decades-old agreements.” Another owner was a bit harsher, as he said, “I don’t know how far we’ll go with this, but we need to have the attention of the big-market clubs. They need to know we’re serious about a revenue-sharing agreement that will give us some significant help.”

It was unclear how much leverage the small-market owners actually had. The report suggested the previous renewal of the American League contract ran through 1994, which would mean nothing could happen until after the CBA expired regardless of the small-market coalition’s votes. Still, the point was made — there were enough small-market franchises willing to band together to make a real threat to a major source of revenue for the large-market franchises that were blocking a revenue-sharing program. Peter Gammons suggested furthermore that “a half-dozen financially distressed franchises” would make a mad dash to be the first team to relocate to the open market in St. Petersburg, Florida* and that the potential infighting between the owners could be enough to threaten baseball’s exceptionally lucrative antitrust exemption. The small-market franchises had the attention they desired.

*Jonah Keri’s The Extra 2% includes an excellent summary of the race to St. Petersburg, as the Giants and White Sox both nearly wound up moving to South Florida before the Rays were granted a franchise.

By the signing of the next collective bargaining agreement in 1996, Selig and his small-market coalition had won their revenue-sharing system and a luxury tax, the first of a number of small-market-forward measures enacted in collective bargaining agreements since. It was just 11 years after Selig’s impassioned fight for the “Milwaukees of the world,” back when he was the lone wolf treated like a crazy person by the rest of baseball’s suits. Selig didn’t even need a decade to get his troops in line and remake the baseball world in his image, as his deft threats to hit large-market owners where it really hurts them turned the tables entirely in his favor.

This revenue sharing argument has been on my mind since I saw a news story discussing a similar system in another sport, the National Basketball Association. The tanking Philadelphia 76ers, who fell to a ridiculous 1-28 with another loss on Sunday night, recently hired former NBA executive, owner and current head of USA Basketball Jerry Colangelo to an executive position in the organization. The move was made, Brian Windhorst of ESPN reported, after NBA owners complained the 76ers weren’t pulling their weight in the NBA’s revenue sharing system. Specifically, Windhorst writes:

“Owners routinely complained about the economic drag the 76ers were inflicting on the league as the revenues of one of the largest-market teams — a franchise expected to contribute more robustly to league revenue-sharing — sagged.”

This is the kind of thing that, as a fan of small-market teams in Wisconsin and a resident in a small-market city in Minneapolis, makes me concerned about the future of sports in the places that I consider home. Nobody had a problem with the tanking strategy when middle-to-smaller market teams like the Houston Astros, Tampa Bay Rays, or Oklahoma City Thunder were the ones punting a season or two in attempts to get better down the line. They were doomed franchises anyway, perennial bottom feeders who needed to try anything to get out of the basement. If anything, in the moment, these teams were praised for their resourcefulness.

Leagues are perfectly happy to let these smaller market franchises languish for years on end, but now we see that this will not stand in a larger market like Philadelphia. Colangelo’s job is to lure stars to Philadelphia via his USA Basketball connections and his long history in the game, and NBA owners lobbied to put him there. This would not and could not happen in Milwaukee or Minnesota. Rich owners would be furious, and the other small-market owners would ask, why not us? Just look at what happened with Greinke. By actually spending the revenue-sharing money they were given, Arizona was accused of “blowing up the salary structure of the sport.”

It’s enough to make me question the entirety of the revenue-sharing scheme. It supposedly exists in order to give the Milwaukees and the Minnesotas a chance. But that’s not how the system has functioned, particularly as Major League Baseball has shut off alternate routes to spending on talent with caps on draft and international expenditures. A paper from William Ryan Colby of Amherst University, a former Rays employee, explores the failures of baseball’s revenue-sharing system. The whole thing is worth a read, but Colby makes a few key points that I want to highlight.

First, focusing on gate receipts while failing to capture unshared local television income, as will happen with multiple teams taking ownership stakes in their regional sports networks, will only make the problems caused by disparate market sizes even worse. Television money is the revenue source most effected by market size — it’s not the ratings that drove the Dodgers’ $8.35 billion deal, but the fact that the Los Angeles market has access to over 2.9 million cable homes, fewer than only New York City. At four-to-five dollars per subscriber carrying the Dodgers’ regional sports network, that represents huge potential profits, and because Dodgers owners The Guggenheim Group owns 50 percent of the network, most of that won’t be thrown into the revenue sharing pot. This pot is supposed to capture all baseball-related revenue and this is a television channel created primarily to broadcast baseball games, and yet it won’t be included in the Dodgers’ revenue-sharing contribution. Many large-market teams have taken controlling interests in regional sports networks, and this will only contribute further to leaguewide inequality.

Second, and most importantly, baseball’s revenue sharing doesn’t create incentives to spend that money in ways that will improve the team. In fact, it can work to subsidize terrible performances — tanking is in large part viable because revenue sharing can cover gaps, as the Tampa Bay Devil Rays regularly used revenue sharing money to pay off team debts. Worse, it can even run counter to the supposed competitive balance purpose. The Philadelphia Phillies, playing in the sixth-largest media market, were the recipients of revenue sharing in the mid-2000s because their teams early in the decade had been bad enough to put a damper on the team’s revenue. So instead of giving a small-market team a chance to capitalize on Philadelphia’s incompetence, the league came to the large market’s rescue (and, naturally, the Phillies had one of their best stretches in franchise history from 2007 through 2011).

Colby concludes: “[T]his research shows that MLB has tried many times and ultimately appears to have failed in their attempts to promote competitive balance through increased payroll balance. They have failed because they have constructed institutions that create backwards incentives and because they have failed to draw a distinction between ‘good’ and ‘bad’ imbalance. New sharing systems in MLB should account for these past failings and allocate resources in a new way that will incentivize success, not subsidize failure.”

Instead, what we have now is a system that encourages small-market teams to stay out of the big boy market and hope for the draft lottery tickets to pan out. When they’re losing, they’re accused of taking handouts. When they dare to spend, they’re accused of ruining the market and spending money they didn’t earn. And why spend to be a .500 team, anyway, if you don’t need the draw of the star players or marginal hope of contending to stay in the black? As an added bonus for the owners, with so many teams pocketing the money or spending it on non-player expenses like debt, it only serves to remove money from the free agent market and to depress player salaries.

We’ve seen teams win with the tanking strategy. It isn’t impossible. But it requires a lot more luck than we prefer to acknowledge. It requires avoiding the draft-day busts and playing service time windows just right, it requires avoiding key injuries and having the right bounce go the right way at the right time. That shouldn’t be the goal. It should be a system where teams can win by playing the game better, playing the game stronger, or playing the game smarter, and where the money they have available matters less than it did before. That’s certainly not what I see in baseball’s revenue sharing system. Instead, I see a system designed to keep small-market teams grasping for straws while clearing an even easier path out of rough situations for large-market teams. All in the name of so-called competitive balance.