Take, say, Chelsea as an example. This format is designed to ensure a Chelsea or Manchester United stays forever in the elite. I'm guessing if a 16-team league was formed tomorrow (assuming everyone wanted to join) that it would include the following clubs, more or less:
Real Madrid, Barcelona, Juventus, Inter, Milan, Bayern, Dortmund, PSG, Manchester City, Liverpool, Arsenal, Chelsea, Manchester United and three others: possibly Napoli, Atletico Madrid, and Benfica.
If Chelsea finish bottom two, they go down. But are they really going to finish bottom two of the second division (Gold League)? Nope. That will be populated by good sides, but Chelsea's wealth right now ensures they won't be relegated from a league where Spurs, Porto, and Sevilla are among the better sides. And even if they were, are they really going to finish outside the top 12 of the third division (Blue League)? That will have the likes of Anderlecht, Celtic, AEK Athens, and Eintracht Frankfurt. Not a chance.
Nevertheless, despite the obvious inequities, we cannot just let clubs like Feyenoord, Anderlecht, and Sporting Lisbon wither because they happen to be in countries with small TV markets. This is the European Union after all. A pan-European league is probably inevitable and logical. It's the execution that matters.