It would prevent the current financial quadopolies that exist in the richest nations (Italy, Spain and England) and triolpolies in the likes of France, Germany, Holland, Portugal and some others. These cash dominations allow them to built gigantic squads with players who regard playing for a team outside the European Cup as some sort of a "failed season", and so will toss aside rival domestic teams.
Looking at history prior to the 1990s, we had around 40 years of simple structure to European competition; the titles winners played in the European Cup, the cup winners in the Cup Winners Cup, and the placings of 2 to around 6 in the UEFA Cup, and all three competitions were knockout meaning the only way to guarantee money was to win all your games, yet the greater prize was actually winning the competition. One can't help thinking that winning the competition these days is merely an afterthought for those running some clubs, as long as they get their bounty from the oxymoron of the group-cup stages. Prior to 1990 we had some truly great teams who were created through endeavour rather than investment; Benfica, Manchester United, Bayern Munich, Ajax, Liverpool.