I have a few questions.
How did he purchase this player from himself?
Player History says: Transfer 10/16/2010 14 Purchased from Honolulu Purple Tide for $ 713 000
How can he afford this player when the team only makes about $50k per week in attendance?
Aren't farm teams illegal?
As an original player, he would have been eligible to receive 97% of the purchase price of the player when sold. So if someone else bid $700,000, that would show up as $679,000 that he would have available to bid. So if he had even $50k in his account, he'd have been able to top a bid of $700k with $713k. (Nevermind that it has to go up two percent so the numbers don't match up precisely).
For your other question, yes, farm teams aren't illegal. ;) (If it's someone opening a second account, of course, that's quite illegal, but if someone has it in their hearts to join this game and then train up a super player for their own or any other nation's NT and not give two farts about anything else, that's well within the rules.)