My problem with this is that without expansion new managers have no incentive to take over an existing team when they can start their own in a new league.

Since I came back aboard with Purebaseball two years ago, 13 new leagues have added. Expansion of this into more leagues may lead to larger revenues, but it leads to less loyalty of managers to leagues. Instead of managers trying to improve their teams, it may seem to some easier to drop a team and just add a new team in a brand new league.