I've long supported some kind of variation of the "Larry Bird Rule," under which teams would have to operate under a salary cap -- but players who were originally drafted by a team would only have 50% (or some other number substantially less than 100%) of their salaries applied to the cap. This would enable the league to strike a pretty good balance between limiting payroll costs and maintaining stability on their rosters.
I don't have the time to go through this exercise now, but I wonder what the "adjusted payroll" of the Yankees would be if you only counted 50% of the salaries of "home-grown" players like Jeter, Williams, Rivera, Posada, and Matsui (sort of).
Interesting thesis..but remember that the demand for free agency eveolved in a non-cap era..and that every sport remembers how baseball got whacked with hugew fines for collusion , when they didn't sign free agents.. That's why a hard cap avoids that problem...there also needs to be a rule , which is far easier to sell with a hard cap..for a maximum salary...many teams who spent big $$ for one or two superstars, had NADA left to sign anyone else..the Pats in the NFL are showing how this can work..