The problem is the prize money is based on the tv revenue which is so high due to the prestige of the teams involved. TV companies will not pay big money for a product involving what they see as “lesser teams”. Football fans obviously don’t see it that way, but looking at football from a pure business perspective this would be a disaster for all clubs.
This is why it’s also not so simple as to just threaten these clubs with expulsion from domestic leagues. We may not want to admit it, and in fact we might enjoy it for a year or two, but a league without those clubs would be seen as massively inferior. I mean; who knows, it might be more enjoyable. It’ll probably be more even and you might get a different title winner every year. But Sky and BT won’t be paying big money for Super Sunday’s where Everton vs Leicester is the biggest game of the season. The repercussions on finances would be huge.
However there seems to be resistance from German clubs and currently PSG. Hopefully the fans of these clubs kick up enough of a fuss to stop it from happening.