A single small market team could try and close the gap, because large markets won’t be challenged that much to care. However, if every small market team did it, you would just move the goalposts. Large markets have PLENTY of ammo in the bank account to raise the payroll ceiling if small markets want to challenge them.
All it will cause is payroll inflation. Small market is spending more just to be in the same spot as before. Instead of us spending $10mil on Wade Miley we will spend $20mil. Same result, just spending more.