Shpeeismegeorgebaii2) Lose a large majority of players because system isn't good and teams get rolled by experienced teams so they avoid the setup so they can lose less games elsewhere.
Why do most tf2 players hate to lose that much? I loved getting rolled by a prem mix full of people I looked up to in a razer cup and making this horrible video. If razer cups didn't die I'd still be doing my best to make teams and get rolled. I must admit that I kinda forgot about them along with everyone else :/
Because not enough close level competition and that comes from a pure lack of numbers. I, like you, enjoy testing myself versus better players but not everyone does, that is why the Divisional system worked so well, yes it was harder to play teams within 7 tiers of skill rating but with it you at least guaranteed teams felt as if they were in the right skill bracket and could challenge. This is more true of other types of contests that came to TF2, cos ESL failed for a different reason - ESL Wire. Top teams had a great time but it was hard to persuade a lower level team to go and play ESL when ETF2L offered more suited competition on a more user friendly platform with closer skill brackets and without an Anti-cheat system that ruined the gaming experience for a lot of players.
Arguably the only way to keep people coming to ESL instead of ETF2L would be for ETF2L to stop running competitions - Though that is dangerous as many people may simply just not migrate. And with a declining competitive scene with slowly reducing numbers it's harder to justify anything.