This is undoubtedly re-creating someone's wheel somewhere, but a quick scan on the internet and Baseball Prospectus did not reveal a simple
analysis of comparing team salary to winning percentage. In summary, there is a positive relationship (not too surprising) but not as strong as a
small-market team apologist had hoped. "Sure, the Yankees and Red Sox make the playoffs every year, but if they had to contend with the Padres'
budget, they would not have a chance. Oakland is just a quant-head exception. It's SO unfair." Something like that goes through my head fairly
regularly. Actually, it is with great joy to see the Padres get Alderson and DePodesta, complementing Towers, who I think is awesome, quant-head
or not.

I digress. The data set and transformations:
16 years of team data (1990-2005). Each data point is the team's winning percentage and salary metric. For salary, I transformed the annual salary
number to both a % (what percent of baseball's salary does a team have) and an index (Team Salary / Average for Year x 100). The salary data
came from USA Today's database. I am not sure whether this is season starting, season ending or an average. It probably makes a difference, but
my instincts is tell me that it will not be a dramatic one. The winning percentages came from historical, end of season standings.

Results:
Granular: this method had data points for every year, team and winning percentage. The fit is not so hot: r-squared of .183, with the slope that you
would expect (more money, higher winning percentage).

Team Averages
I took several averages for teams, thinking that year-to-year fluctuations may be masking a stronger trend. Anyway, I took averages for the
franchises for the whole 16 year period, 2000-2005 and 1990-1999. When you do this, the there is a stronger relationship:

So, while there is still some variance, the high spending teams seem to win while low spending ones tend to lose. Resolving this problem is not simple. Salary caps are a windfall to the owners, while the current system, while great for players, clearly hinders smaller market teams.

One question one could ask, is that maybe good teams just can spend more, so payroll capacity is a function of team quality. A quick check on this is to compare team salary vs. exogenous factors, such as market size. The two charts below chart team salary vs. DMA and Local Media Dollars (from baseball disclosures in prior CBA rounds). Both show a fairly strong correlation, suggesting that the bulk of salaries can be explained by the market size.