Part of the pitch the NRL makes over the AFL to young players is that they won’t get drafted and sent across the country, they can play for the same club at senior level that they played for as a junior. Telling young NSW and Queensland athletes that if they play footy they can stay where they are is of value to growing the game. An AFL run academy that ends up with players in the draft undermines that.
It also in theory makes it more likely that the northern clubs will be contending at best and competitive at worst. The AFL wants all those clubs to be more successful overall than football state clubs, because that’s how they get people there to pay what limited attention they do.
There’s all sorts of objectionable components to the whole set up, but the reality is that Sydney’s continued success is not a bug, it’s a feature.