As someone who has done a little bit of behind the scenes work volunteering for FGC events, I can tell you that these rules are straight up impossible to comply with.
A hard cap of 200 entrants hard capped at $20 entry fees means a maximum of $4000 possible to cover the event's costs, and that's only if the event hits cap. No event that hosts 200 players can be run that cheaply, that's just insane. I don't know what Nintendo thinks venues cost, but, uh, no. Don't think smaller events can scale down either, because if they're getting less than 200 players then they're getting a lot less than this $4000 maximum.
What's even worse is that they've strictly forbid any other means of covering costs. The above doesn't actually matter all that much because entry fees alone have never been close to enough to fund tournaments anyway. The real money comes from sponsors, which Nintendo is now banning. Those Red Bull logos plastered on every stream might be single-handedly keeping fighting game tournaments alive! If you ask TOs to choose between the sponsors they are dependent on to make the event possible in the first place or including Nintendo games in their lineup, the Nintendo games are getting dropped.
Not allowed to sell food either, and artists and other vendors are also banned. So I guess players just don't get to eat while they're there, I gotta compete on an empty stomach? And I don't get to pick up some nice souvenirs from all the booths typically set up at what can really be described as a convention that also happens to host a few brackets. That's a good way to suck the soul out of events, thanks.
And then they want tournaments to provide a public audit to prove they're losing money. I'll tell you right now that isn't necessary, every tournament is losing money right now. We're lucky to have TOs that are willing to eat some cost to make these events possible, they know they're not going into this to make a profit, but Nintendo is aggressively asking them to bankrupt themselves as quickly as possible.
There are so many other problems beyond this, but I don't have the energy to go point by point on everything else. This is just the easiest bit of napkin math I can point out.
The only hope is that the largest supermajors can negotiate a license for more realistic terms. But that's not something you can expect every event to be able to get, and any event that cannot strike a better deal simply can't exist. Perhaps small locals can just fly under the radar and hope this won't be enforced towards them, but it's the mid-size events that are likely to be completely screwed. Expect most multi-game events to just drop anything Nintendo from their lineup, even ones that potentially could try to negotiate a license may not feel it worth bothering. Easier to stick to running games that do not have batshit insane publishers.
