The fact that, at this point, with less than 7 hours until the youth leagues close, only 21 teams have expressed interest, I think, shows that the current format has very little appeal.

I believe that the fact that a team is only guaranteed 6 matches per season... makes many managers not even consider it.

I don't know what the most suitable format would be. Personally, I would prefer a league format with at least 15 matches per season. The same number of matches for all teams.

Perhaps instead of considering having several extra teams... it would be better to consider having youth competitions in a format similar to national leagues. A-B-C or even D if demand is very high.

I agree that it currently lacks appeal for managers. The prizes are low, the outcome is very random, and 7-a-side? That's unrealistic.

We could try to copy the current Champions League format.
The XP per match for each youth player should be increased.
Eleven players should be allowed (if you have four, then seven COM players are used). The formation should be selectable based on the number of players available.

Ultimately, I would copy the tactics system from regular leagues. I would fill the starting eleven with COM players if needed. I would increase the XP of the youth players to make the competition more attractive for managers and to add some gameplay... I would try to copy the current Champions League format.

These are just ideas... but something has to change, right? A youth player going to the first team with barely 5 XP points after two or three seasons in the Youth League is insufficient.