Does this take the fun out of the game and make it inequitable?
Somewhat!
The league at early levels, is a joke in most cases with most teams being managed by inactive managers. Most active managers will beat these teams easily, regardless of whether or not they buy tokens. The champions league will also consist of several abandoned teams (especially levels 2-4) and in most cases you won't face a quality team before the QTR-finals until you outlevel the onslaught of abandoned teams! For me, I didn't face a 5* team before the QTR's until level 8.
Because so many teams are so bad at early level, it might be a little inequitable. However, once you outlevel all the inactive managers, lets just say buying a couple hundred tokens really won't give a team that much of an advantage.
Also, the financial dynamics of the game makes it more difficult to compete with token buyers at lower levels. The Cup and Champions League generate the most revenue and at level 2, you have no previous CL revenue and most likely mr. bot robot got you eliminated from the cup before you took over a team. W/O revenue from such competitions, managers can't afford multiple 5 star players. Given time, free players can generate the funds to afford several higher quality players.
Should there be leagues where players have "money leagues" only so the rest of the players playing without spending real money will have a fair league?[/
As Gert mentioned above, this game is a business and exists to make money for nordeus. Not granting token buyers the option to compete with non-token buyers really wouldn't be a very good business model.
This game also provides plenty of avenues for free players to be competitive with token buyers. Token farming by watching videos, filling out survey's etc... Tanking is another means. This game also frequently groups managers who are T11 friends with other managers into league with each other. So by adding such managers, it'll help you avoid token buyers in your tournament draws.
Don't let the token buyers scare you either! I can't speak for all managers but on my server most the token buyers don't really know what they're doing. There is one team on my server at my level (level 12), that has a full scout list starting 11 and hasn't won the champions league yet. There are multiple factors that affect performance beyond just player quality. If the token buyer doesn't understand these (counter-formations, form, etc...), they're setting themselves up for disappointment.