My thoughts on this are varied. Luckily I have been able to find good scratch leagues no matter where I have lived. The main driver will be do you have enough interest and bowlers willing to bowl in a scratch league. If the answer is yes, then it comes about finding a way to attact them to your league. My thoughts would be to offer something different. Maybe it is making it a sports shot/PBA experience league. We started this when I live in CA, and it worked well. But it was a singles league, we bowled best 3 out 5 and the winner was determined by winning%, not just total wins. Not practical for a team league. Another way to differentiate your league could be to offer a large prize for first. It may mean higher sponser fees per team and higher league fees, which could be a tough sell in today's economy, but it could help generate interest. Maybe it could be a 3 member team, bowling a Peterson Point type of format.....4 games you bowl 1 team for the first 2 games, move and bowl a second team for last 2 games.
I don't think the cap is the problem. I bowled in a league in Norcal, that had 4 member teams with an 800 cap, and it never moved. In the early 2000's that league never had less then 32 teams when I bowled it. It also cost between $35-$40/ night to bowl. But first prize was $10,000. We also enforced a dress code, black slacks, collared team shirts (paid for by the league out of the sponsor fees which was $300/team, the league had a deal with a local place that stitched team names on the back and person's first name on the front as well as a league logo), no hats, etc. Not sure if that would work today with the economy the way it is. This league also offered a playoff system....it ran in thirds with 3 divisions. So 9 spots in the playoffs from there, 3 Wild Cards - most points without a division win (or more if 1 team won more then 1 third) and then 2 teams came out of a last chance rolloff. Every team not in the playoffs would show up on a Saturday before the last night of league. Roll 3 games, and then the top 8-10 teams based on total pins would get seeded and roll 2 game matches using the league point system until you were down to just 2 teams (ties broken by total pins of the 2 game matches). So 14 teams in, and then you rolled 2 game matches in the playoffs the 2 lowest WC teams would roll the 2 teams out of the last chance tournament (seed 11 vs seed 14, 12 vs 13) then the two winners would roll the next 2 lowest seed, etc. This would carry over into Sunday if you kept winning. Then on the last league night, the team that came out of the Sunday playoff would roll the team that was the #1 seed for the championship, while the rest of the league would roll a sweeper night with prizes to the top men/women/teams etc. This way there was an incentive to be the #1 seed, worst you could do was second place. Not sure I agree with that, the format could be tweeked when you got down to say 8 teams left to bring in the top seed and roll 1 vs 8, 2 vs 7, etc and then continue until there are just 2 teams left or bring in the top seed at 4 teams left, etc.
Just some thoughts, hope it helps.
Jorge300