I have a different take on this. First punishing any team that comes in last is not the solution because somebody always comes in last. Rewarding teams that finish with better records is not the solution because they are not the problem.
So what is the issue. Look at draft history is for 10 seasons.
Team 1: 28th,19th,22nd,16th,9th,12th,7th,15th,14th, 20th
Team 2: 10th, 5th, 2nd, 4th, 1st, 3rd, 1st, 12th, 9th, 3rd
Team 3: 1st, 5th, 12th,14th, 3rd, 9th, 15th, 19th, 12th,18th
Team 1 is not a problem but team 2 is tanking. Team 3 who knows maybe they just are not too good but nothing obvious.
3 things should be tied to teams consistently losing. FA signings, IFA's willingness to sign and Draft picks willing to sign. Base it on the past 5 seasons draft history
FA's is easy. Make it 1 of the things a FA considers draft history for the past 5 seasons The more top 10 picks the harder it is to sign FA's. It should outweigh ballpark effects and coach effects. The worse you are the more money you will need to sign FA's. This won't solve much in itself since the guy who is tanking won't care about FA's but it does give some small reward to the other teams in the league and helps prevent the I'm not tanking I'm just not trying to win since I'm out of it.
When IFA's are generated their should be teams they will not play for and it should be based on the previous 5 seasons draft position. Again look at how many seasons with a top 10 pick.
For instance team #2 in season 7 should have a hard time signing any IFA after all they have had a top 5 draft pick in seasons 2 through 6. They should still see them based on Int Scouting but the best ones should respond with "I do not want to play for a franchise that does not try to win."
Team #3 should have a few of the top IFA's respond that way since they had a top 10 pick in seasons 2, 5 and 6 but in season 8 they should get fewer IFA's refusing to play for them since they would only have 2 seasons with a top 10 pick out of the last 5 seasons.
Team #1 should have no IFA refuse to sign in season 7 since his only top 10 draft pick was in season 5 but in season 8 there should be a small chance he may get that message from a player since he had 2 top 10 picks in season 5 and 7.
Draft picks could respond 2 ways
1) Any and all draft picks that are in the top 15 should respond the same way as IFA's. The worse you are the less chance they, and any comp pick you get, will sign. .
2) The top 20 or so OAV (I know it is not the best way to judge a player but the sim has to use something) can have listed somewhere I will noy play for the following teams. it would be different for each player.