You got rid of your draftees...
That means no-home grown/local talent players.
Also, your draftees/home grown players, they got to be good for the level you are at and they also need to play minutes. Only then will you get a boost in merch.
Oh, I have some homegrown guys... Two of my crappy draftees from last year. Other than that I never have any home grown players, except in the beginning when I first started, because I have never had a good draft. Partly because it seems like I am always 13- 16th pick.
But I have never seem a huge drop like this before. Perhaps maybe my merchandise is so bad because I fired them all, instead of being able to sell at least one, like I usually do (for about 1000). Yes, they were all that bad, that they weren't even picked up for 1000.