Magath, writing in the Hamburger Abendblatt newspaper, said the balance of power had shifted too far in favour of players.
"Bans from international competitions like the Champions League, simultaneous suspension from the national team or a transfer ban for a year are useful instruments to redress the balance between players and club," Magath said.
"Football would benefit from that," the 57-year-old added.
Magath, who had a long playing career with Hamburg SV and West Germany, has shown his tough side this season, sending U.S. international Jermaine Jones and Alexander Baumjohann among others to the reserves after questioning their commitment.
On Tuesday, Jones joined Blackburn Rovers on loan to the end of the season.
"Professional players should be treated like companies," he said. "These incidents threaten to throw this line of work into disrepute."
He said players currently had too much control over clubs.
"The professional players are in a comfortable situation where they secure high income over a longer period of time. The clubs however are not guaranteed that they will receive over the same period of time the equivalent sporting performances in return."
He added: "The clubs got into a sort of Babylonian captivity whereby they lack the legal and contractual means to sever this dependency without significant loss."
