First are the revenues. Back in 2006, a year before the recession started, baseball's revenues were around $5.5 billion. Today, they are nearly $8.5 billion. And only now is free-agent spending catching up; over the previous three offseasons, it fell somewhere in the $1.3 billion to $1.4 billion range.
More than that are the mechanisms in place that more or less force teams to spend their money on free agents. Simply put: They can't spend it anywhere else. [emphasis added]
Huh? Sure they can. Pay scouts more, pay baseball operations people more, pay minor league players and coaches more, refund some of the government subsidies used to pay for stadiums, fund more NCAA baseball scholarships... there are lots of ways to invest in baseball as an industry that will be more beneficial over the long term than simply shoving even more money into the pockets of free agents. Some of this revenue should find it's way to everyone who contributes.
Why does MLB have record revenues anyway? I would argue that it's more to with improvements to marketing, analytics and team operational models than anything the players are doing differently.