Your players don’t become weaker when they level up. In fact, they get stronger.
Have you ever checked their Attack, Defence, Physical and Mental abilities? They have not changed at all (or changed for the worse), your players are still the same.
However, as you have been promoted to the next level, the quality needed for every star is naturally higher. This is why it may look like your players have gotten weaker. For example: If you need a quality of 30 on a lower level in order to win a third star for a certain player, you will need a skill of 35 when you advance to the next level.
In real football, a very good player from the second league may just be an average player in the top league at the beginning. This means that stars are linked to your level: The higher your level, the more quality/performance is needed from your players in order to gain the next star.