In some leagues there are regulations like you can only spend a certain amount of you revenue on players. But overall there is this ‘they earned their success, so they are allowed to use the money that comes from it as they wish’
For a smaller team it is difficult to make their way up. But with luck, good scouting/youth academies, you can work your way up.
There is still that problem, that there is no real way to handle the relative new problem of outside investors who just want to buy titles. It began with Abramowich in Chelsea and the Glazers in Manchester. There are too many people who profit from this new money, so they don’t want to restrict the inflow.
And as the leagues are no closed system and due to anti trust regulations in Europe, you can not introduce such regulations easily. American sorts leagues were founded as business entities to make money, while the European leagues had this more ‘Olympic’ spirit of an open competition.
Currently in Germanys Bundesliga is a team,.whose current coach is with with them since they were in the 5. Tier 16 years ago. They made their way up through the relegation system. These wonderful stories make this system so appealing.
And in many leagues clubs are real clubs, not businesses. The club members are the owners (Barca, Benfica, Bayern…)