Here is the link to the fair play guidelines: https://www.whatifsports.com/account/FairPlayGuidelines/
About 3/4 of the way down the page is the section on failure to field a competitive team. The team you referenced is failing point #1. In a private world where the commissioner has another owner lined up to take over, I think they will replace the offending owner. In a public world where there is no commissioner they may not remove the offending owner because there is no replacement owner ready to take over.