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What that does is keep the game from generating FA's for that league if you disable the draft. Usually, if you disable the draft, the game still creates a bunch of young FA's to make sure the league has enough talent coming in. This is a problem if you're trying to add an independent league that will just soak up the leftovers from MLB (or your fictional major league).
With this enabled, you can turn off the draft in your indy leagues and rest assured that the ONLY way they'll get players is by hiring the guys MLB doesn't want.
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