This is what’s wrong with the IBJJF. IBJJF establishes a downline to the affiliation heads. They in turn establish downlines to the affiliate schools. The affiliate schools then charge more to the gym owners and/or the students. It’s actually pretty blatant fraud, covered up by manipulating the belt ranks to claim that the would be victims have another issue going on other than the effects of the fraud. But it’s a known and clear, common, fraud.
The rest of the business is legit, which helps cover that element up, but at it’s core, it’s a pyramid scheme. Remember that the affiliation offers no goods and services. It’s just necessary for the rest to function smoothly, as otherwise they deem you in violation.
Keep in mind that NAGA and such prove that you can run a tournament without all the BS. And much more simply. So why is it there? Because its a pyramid scheme designed to extract passive income.