Do you think that reserving Champions League places for pre-designated elite teams will have a neutral effect on their players' wages? I don't.
It's the same as how at least half of the American sports teams these days don't give their players contracts for more than the minimum required, or for more than a year or two. There is no risk of being relegated and they are actually incentivised to lose, because then they are rewarded with "draft picks". Yes, the wages are still higher than in football, for all the reasons I've explained, but they are still a fraction of what the market dictates they should be. I'll bet the wage-to-turnover ratio for every premier league side is at least three times higher than any American team. How many American teams are there who spend more on wages than their turnover???
And I don't think it does make the leagues more competitive - the vast majority of the games have absolutely nothing at stake. Who cares if the New York Mets defeat the Reds in September, or the Brooklyn Woosh against the Miami Kaboom mid-season. Not only are the games completely meaningless but these days both sides are more likely than not actively trying to lose. Whereas outside America, even though the quality may be poor, every single Watford or Norwich City fixture matters tremendously, because literally hundreds of millions of Pounds are at stake. And the atmosphere is intense whereas 90% of American sports fixtures consist of bored people poking at their phones.