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I think its good for baseball...
Remember the weekend the news was broken? Yep, NBA All-Star Break and baseball in its off-season was attracting more attention.
A-Rod is literally surrounded by by media and attention - hell regular news sources were covering it when most other sports things are ignored.
As for owners...
To be honest, the entire idea of small or medium markets is a bit wrong. Take Arte Moreno, the new owner of the Angels - he basically said "we need to stop acting like a medium-market team when we are actually a large-market team" which is true as LA is the second largest market.
A lot of teams do hold back - think the Brewers and what not. Many great franchises (or formerly great franches such as the Tigers) come to mind where the owners aren't willing to spend and thus basically cheat customers out of their moneys worth.
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