The problem is the vast difference between baseball (and most team sports) and F1. In baseball, you’ve got 160 games for each team in a season with dozens of teams and hundreds of players – that’s a LOT of variables. Each team plays each other team like a dozen times and eventually works towards an elimination type post season.
In F1, you’ve got 3 dozen races, 10 teams, and 20 drivers total. The top ten finishers in each race get points based on their place and the guy with the most points wins the championship. The team with the most points also wins. When you’ve got a lot of money, you hire the best drivers and spend the most to develop the car and you end up with a handful of teams always in the top 5. Sure, the actual podium will change each race, but the points system is heavily weighted toward the top 3. There are far fewer variables and opportunities to compete. And the difference in car performance because you can afford more R&D is a gap that simply can’t be made up for with a great driver. Imagine taking a standard model straight from a dealer to a NASCAR race. The best driver in the world can’t make up for the difference and even if he could, he’s already working for the best team, driving the best car, and you can’t afford to steal him away.
As it stands, even with the limits in place, 3 teams take turns winnings (Mercedes, Ferrari, and Red Bull). The other 14 racers/7 teams literally compete for what is referred to as “best of the rest.”
McLaren is a great example of the problem F1 faces even with the current regulations attempting to limit spending. The past few seasons McLaren has had Fernando Alonso driving for them. He is a two-time F1 world champion (2005 and 2006) and got 2nd place in 2010, 12, and 13 when he drove for Ferrari. He won the World Endurance Championship this year. Since joining McLaren, who have been struggling to get sponsorship money for the last few years, he finished 14th, and 10th. He struggles to maintain a position in the top ten in every race. He’s an incredible driver, but the team just doesn’t have the money to build an incredible car; and they aren’t even one of the “poor” teams.
If you let the teams do whatever they want, the performance gap between the top, middle, and bottom will widen to the point that the middle teams will have no hope for podium, and the bottom will have no hope to even earn points. The “poorest” teams will lose sponsorship and get poorer and eventually drop out and the races will get boring and have less participants. No one wants to see a ten car race.