There are 2 points of views here:
1) PSL needs KP : KP is like an ambassador of PSL, when he goes back to England / county circuit he will speak good about PSL, and that will also encourage some other English players to consider playing PSL.
You can't see returns on everything. Investment on KP, Sanga etc. is like marketing budget for PSL ,and I think that should be increased.
PSL - good foreign players === Qaed-e-Azam trophy
What difference will be left?
Audience wants to see entertaining , and competitive cricket, and likes of KP are crowd pullers. Just like anyone don't want to watch Khurram Manzoor, Asad Shafiq, Akmals bat in PSL/T20.
2) PCB needs to decide what their objective is: Do they want to save $$$. or to build their brand further?? Foreign players pulling out could be a concern for some teams. But overall, this also gives a rare opportunity for our own domestic players to lead from the front and win it in high profile game? Its like whatever you have learnt in few weeks working with KP, player now needs to show their mettle.
3) vs India (BCCI) : BCCI says cricket can not happen because of govt. Then why our TV channels broadcast IPL, Bollywood movies. Why? Can one even imagine what the market share of Bollywood movies is from Pakistan? Its about 10% of their earnings. Indians are money minded people. Find ways to hit their pockets, they will come down to Mother Earth. PCB should be firm in dealings with ICC, tell them straight away, they don't want any games with India at ICC level. ICC minted a lot of $$$ because of India vs Pak match. Why even ICC gets that $. Demolish ICC dream of promoting associates. where they want to spend billions, however, they have turned their blind eye towards Pakistan.
4) MoU : Many say, Pak might lose the case. This could be correct, as there are many loopholes in the document. But point of contention is , BCCI saying they have NOT SIGNED THE DOCUMENT. Now that puts question mark on their business practices. I mean, if somehow PCB proves that BCCI people have signed that document. Then it will send a strong message that BCCI retracts from their own signings.