Isn't that the point of a meritocracy? They're on a better position because they won in the past. For American sports I'm only familiar with the NHL, and there performing poorly gets you better draft picks, i.e. poor performance is rewarded. Certainly makes for more competitive sports in the long run, especially combined with the transfer cap, but essentially the league is set up to keep the teams roughly level and not reward success. It has its advantages, but it's the complete opposite of the football pyramid where good performance is rewarded and poor performance is punished.
And make no mistake, this proposal was not to make things more exciting and competitive, they just don't want the risk of their poor performance resulting in missing out on the CL (and get more money st the expense of the subtop teams, widening the gap to them even more).
That's like saying that we have an economic meritocracy when lazy children of billionaires are the richest people around. Meritocracy means skill and hard work are rewarded, not a glorious past. You're thinking of feudalism.