I disagree strongly on both points you present here. First, your usage of 'free market' here is totally opposite of how the term is currently used or how an economist would define it. We don't say that any other business isn't following a 'free market' approach, because it prices its products or pays its workers with the intent of making a reasonable profit and return on investment. Operating at a profit which covers the cost of capital is the express purpose of any business. To do otherwise is to go bankrupt. You are suggesting that the goal of baseball ownership should be to keep paying money into the team, running said team at a loss, in order to seek wins. While there certainly are times where operating at a loss, as a prelude to a new stadium or media contract, might make great business sense to increase fan interest and garner a larger share of the local entertainment spending, that often is not the case.
Second, I don't think the Yankees blowing through the lux cap and paying the tax helps baseball at all. In fact I believe IT SEVERELY HARMS BASEBALL by reducing the competitiveness of other teams. If this is the approach, then the absolute biggest money teams will almost always win. That is one of the most serious problems with baseball as a sport. I think we should actually have hard caps on team salary budget, as football does. Football, over time, is more competitive than baseball, which is one reason it is more popular. The old era of the Yankees always win is only a great thing if you live near NYC. Having the Yankees blow through the salary cap would turn baseball into Harlem Globetrotters vs patsies.
Baseball should follow a modified NBA approach and adopt a minimum team salary budget. The minimum limit would be based upon total salary spent during the entire season, not a point in time, with the team writing a check to its players to cover any shortfall in spending for the season.
On another topic which has come up here: there are serious fairness problems with increased revenue sharing. Teams aren't sold by the league for a fixed price; teams are sold by owners. Large revenue teams sell for more precisely because they have more revenue. If you increase sharing of local revenue, then you instantaneously increase the market value of small market teams while reducing the value of large market teams. For a large market team this will not be a trivial loss in value -- an ownership group which has just purchased a large market team would find itself in a negative value position.
The issue of players getting a fair share of total revenues needs to be addressed by straight-forward means, such as adjusting maximum and minimum team salary spending, increasing minimum player salaries, increasing the % of actual value to be awarded by arbitrators, and starting arb eligibility earlier.
Expansion seems contrary to the quality of the game.
I don't see elderly players not getting the salaries they seek as a particular problem. The union has favored an almost seniority-based salary structure, which is totally counter to player value. It is not a stable system and it needs to change. Formal analytics have pounded into management's consciousness the folly of over-paying for players steeply declining or even worthless mid-30s and beyond seasons. The players will need to seek their increased remuneration earlier in player careers.
