Not capitalism at all
The fundamental problem here is that MLB is not viewed legally nor is it managed like any normal capitalist business in the USA.
Most capitalist business have as an objective to take business away from their competitors. Who are the competitors of the NY Yankees? The Boston Red Sox? Baloney. The competitors of the NY Yankess are other entertainment and sports enterprises (movies, cable TV, the NFL, the NBA, etc.) The NY Yankees need other healthy, competitive MLB teams in order to stay in business. The individual teams are not independent capitalist businesses. MLB overall is the business enterprise. Yet, the US courts (e.g. free agency) coupled with the anti-trust exemption makes MLB this odd duck where teams act like competitors in player salaries, but act in collusion in other aspects of their business.
The rich teams (Yankees, Braves, Rangers, etc.) spend freely on salaries while depending on MLB to protect their ultimate business success by providing teams for them to compete with. The solution in my opinion is to either recognize that MLB is ONE business, and that players work for MLB, not individual teams, OR to cut each team loose from much of the business control of MLB.
The first is very messy, with all of the existing contracts in place.
The second, is very workable, however. Just give any team the right to locate anywhere they please, and the problem will largely go away over time. The Yankess & Mets would not be able to command such high local revenue if they also had to complete with relocated Twins, Royals, and Marlins suddenly located in various buroughs of NYC. If NYC could support 3 teams in the 40's, it can surely support 5 or 6 teams today. Do the same in the other large metro areas, and suddenly "small market team" has a whole new meaning.
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