I don't think in the long term it's enormously damaging. It gives clubs a chance to reset finances and if you are a big club there's a decent chance you can bounce out in a year or two with finances in order and probably a few supporters passions reignited by promotion, visiting new grounds, sticking my the club etc. Sounds better than stagnating in the championship in some respects.

That said...it could take decades to get out, as we know only too well..