[theo_luddite]

Once a club is not recognised by the FA surely all its players become free agents? They do not need to be banned.

Effectively they are banned. It's like a club not fulfilling it's fixtures which will surely happen if they don't withdraw from National Leagues before fixtures are published before next season and the club doesn't fulfil them. The players (as well as the clubs) are then fined by the local (probably county) FA or at the relevant level (which transfers to National and International FA's) and can't register or play again until the fine is paid. (Sunday League experience but it still applies wherever you are in the pyramid). For top players they probably spend more in an afternoon getting another tattoo on their forearm.

The club not wanting to compete in a league competition isn't much different from a club going bust and not being able to compete. However a club wanting to compete in a sanctioned league and an unsanctioned league is a different matter. The FA is within it's rights to ban them from the sanctioned league no matter what law suits the clubs want throw at them. Whether it makes financial sense for the FA to do it is another matter. Where the money flows is what will decide it all.