I agree my version of implementation was a little complex, but while I want the bonus for growing and keeping players long-term I also didn't want it to be such a big bonus that it is incredibly disadvantageous to play the transfer wire if that's what people want to do.
The most important part of my implementation, and I'm going to go ahead and assume we'd be talking about option 2 (length of time with team or "loyalty" also presented by some of the other posters), is that you have diminishing returns for each player. So while a team is still going to get a bigger bonus in-game for playing 4 or 5 long-tenured players at a time than a team with only 1 or 2 long-tenured players, the gap in elevated skill levels will be much, much closer than if the 4 or 5 team was playing against a team that is refreshed every single season.
I don't really care about the specifics behind how it is done; I understand I provided the formula but not the rationale behind it. :D