Maybe there should be a mechanism that prevents low league teams from buying ($200K salary) players. Maybe linked to the salary floor of a league or whatever...
Here's my idea for this mechanism: set a maximum salary a team can bid for, based on their current profitability and cash reserves. A team may not bid on a player whose added salary would bankrupt them in 5 weeks. Here's the formula:
HighestSalaryPurchasable = TypicalWeeklyNetIncome + (CashOnHand/5)
The above formula lets you devote a maximum of your current profitabilty, plus one fifth of your cash reserves, to your new level of weekly expenses. All other things being equal, this level of unprofitability would exhaust your cash in 5 weeks. Any player who would consume all of a team's cash faster than that is a player that team can't afford. (NOTE: CashOnHand reflects your current bid for the player. If you have $300K and you bid $120K on the player, your CashOnHand would be $180K in the above formula.)
For example, here's what my team's limit would be:
HighestSalaryPurchasable = TypicalWeeklyNetIncome + (CashOnHand/5)
HighestSalaryPurchasable = 32366 + (287549/5)
HighestSalaryPurchasable = 32366 + 57510
HighestSalaryPurchasable = 89876
Which feels like a correct ceiling for my team.
And that's assuming I could get the player for free. Again, the money you have bid for the player is deducted from yur CashOnHand. So, in practice, my HighestSalaryPurchasable would be lower. Which creates an interesting side effect: the more you bid for a player, the lower your CashOnHand is, which lowers the maximum salary you are allowed to take on. This would filter high-salary players towards higher-level teams, or at least better-managed ones.
What I like about this system is that it drives the right behavior, and never punishes it. If a team can't quite afford a player it really wants to buy, what will it do? Cut expenses to drive up their TypicalWeeklyNetIncome: transfer list unused players, cut scouting costs, get cheaper staff. On the flip side of the same coin, lower-level teams will not be prevented from buying players they can afford, as they would in a system tied to the level of play or salary floor. Furthermore, it makes no distinction between less wealthy but profitable teams, and teams who run at a loss but have built cash reserves. Those both reflect good management, and we don't want to reward one type of good management at the expense of another.
There need to be some caveats, of course. And you can argue whether the threshhold should be 5 weeks, or 4, or 10. But I think this is a reasonable fast-and-dirty formula for determining if a team is buying a player they can't afford to keep.