Baseball operates on a "luxury tax" system which was implemented in 1996, eliminated around 200 then brought back a couple of years later. Currently teams who outspend a certain threshold have to pay a percentage of the overspend as a tax. This percentage increases every time they overspend. The previous system based it on the salaries of other teams, 5th and 6th place, which the richer teams didn't like.I don't know if I'm crossing my sports here, but were the Yankees the ones who ignored their salary cap for 14 years on the trot (and so payed a tax penalty)?
So, technically they didn't ignore it, they just chose to spend more and pay the tax. The Red Sox did the same last year to win the World Series and this year it stopped them bringing players in during the most recent window as they didn't think it would improve their chances.
Its efficacy is definitely not clear cut, with lots of people arguing that it either does or doesn't work. The strongest argument is that, because of the increasing tax, teams are more willing to underspend after a few years to reset it, although this obviously depends on the teams finances, which will stop long periods of domination. However, as you note, rich teams just pay it. I'm pretty sure that the Red Sox have the highest wage bill this year and they've been average at best and unable to consistently pull wins together. The Yankees have surpassed the threshold every year since 2003, they've won 1 world series in that time.