The FPF has a big problem: it is illegal. You can't forbid a property from spending its money on its company. The FPF serves to crystallize the positions of strength and prevent small teams from becoming big. If City is sanctioned and appeals to the court, FPF will be canceled (and probably PL will have to repay City with hundreds of millions).
The parent company is not forbidden
per se to spend its own money at all in any way shape or form as long as they follow local laws. They are however prohibited to do so if they want to participate in the
competition.
Participation in the competition, comes with a set framework that all clubs participating are obligated to agree to to enter the competition, in this case the Premier League.
Want to spend frivilous amounts of money? Go ahed. You can however then not participate in the competition. UEFA is the governing body, all registered clubs in UEFA needs to act according to its laws. All clubs accept UEFAs authority by being part of the league system.
The local leagues are free to enact their own, harsher version of FFP, for example in the case of La Liga.
The FFP is there to ensure that clubs dont go under from being victims of frivilous owners who spend huge amounts of money only to leave the clubs high and dry, which has been the case with many clubs, for example Malaga who ended up being forced to release their entire first team squad due to a horrible foreign owner that spent money like a drunk sailor.
It is there not to prevent small teams from becoming big, but to prevent big and small teams from overreaching, unable to handle their financial obligations. The system isnt perfect, but its better than sacrificing a few clubs in the process to let everyone else spend freely. What do you imagine happens if a oil club gets told there is a no-limit of spend? Think £200m for a player is a lot? Try £400m for Mbappe on a 10 year contract. Player values for the elite clubs will reach a level of inflation that WILL cause clubs to go bankrupt the moment a investor needs to pull out,or we hit a new recession that impacts clubs finances like it did with Covid.
The courts cant choose to cancel FFP without having a legal framework to reference. It would require legislation from the government to be passed into law to do that.
Currently, there is nothing that stops a governing body of a sports assosication to enact its own rules that still comply with regular employment laws in relation to employees of a sport club under contract, which are slightly differenct from say someone who works as a taxi driver, or as a cashier re: employment protection etc.