Multiple ViewModels associated with a single view

No that is fine; each object should be a ViewModel in its own right. It makes for cleaner code, nicer interactions, and remember, if it works well then it's correct (even if it violates guidelines).

I would do it exactly the way you are prescribing. I'd bind my grid to a Team, which would have an ObservableCollection<Player>, where Player is another ViewModel-type class. Each row item would get the Player as its DataContext and so you're still binding to ViewModel properties as you'd expect: and Player can still have public properties for ICommands (likely RelayCommands) for manipulation!

Hope that helps!

Far from violating guidelines, I think this is recommendated design. At least in my projects you will see this pattern repeatedly.

This pattern comes in particularly useful in conjunction with DataTemplates. For example you could define a DataTemplate in your Application.Resources for your PlayerViewModel like so:

<DataTemplate DataType="viewModels:PlayerViewModel">
    <StackPanel Orientation="Vertical">
        <Image Source="/Images/Player.png"/>
        <TextBlock Text="{Binding Name}"/>
    </StackPanel>
</DataTemplate>

And then if you wanted to display a list of players you simply bind a ListBox etc to your TeamViewModel.Players ObservableCollection and you automatically get the above DataTemplate displayed for each player:

<ListBox ItemsSource="{Binding Players}"/>