I feel sorry for the players of Project M, but I think Nintendo's support is more important then keeping a Brawl Mod in play at tournaments.
Capcom, Warner Brothers Games, Namco, Microsoft, and other fighting game makers sponsor tournaments and try to support their games at these events.
People have screamed for years for Nintendo to support the community and help sponsor tournaments, but are now upset because Nintendo does not want to support a mod.
Nintendo in my opinion is pretty giving. They could be total jerks and require only Smash 4 to be played at tournaments. They allow 64 and Melee at these events, games that are no longer sold on store shelves and earn Nintendo little to no promotional value from supporting them.
Not actively trying to kill other games. Very giving. It's also far too easy to make an argument that Nintendo isn't trying to kill them off because their worried about the backlash moreso than anything else.
I think Nintendo's sponsorship is a good thing. Evo had two Smash games at the 2015 event. The competie scene has gotten more attention. More importantly, Nintendo's support has finally allowed Smash to get the attention it deserves.
We always had the player base and community. The only other thing we ever needed was the support of Nintendo and the weight behind their name to ensure we finally have our place.
If we have to lose Project M to get that support, then its a small price to pay. Or would everyone like to go back to Nintendo fighting us to even make it to Evo and having to fight other games whose companies do support them at events?
But what Nintendo gives barely qualifies as support. All I've heard of Nintendo doing is retweeting the event once or twice, running some booths, and supplying setups, which are taken back after the event. Setups are nice, especially for these events, but that's a lot less than what most other companies are doing for their game's scene, and all most of the scene gets from Nintendo's "support" are Splatoon ads and watered-down commentary.
Also, I'd hesitate to give Nintendo too much credit for growing the competitive scene. I have yet to hear of someone learning about the competitive scene from Nintendo. The main factors were the documentary and Sm4sh. I'm sure Nintendo helped, but I'd be confident their "support" has added less than 1% of the current competitive playerbase.
It seems pretty clear that Nintendo is just using the competitive playerbase as another demographic to market to and nothing more. There's nothing wrong with that in and of itself, they are a business after all. However, they make almost no attempt to hide it, and contribute next to nothing, yet people are still thrilled about it. They've done more harm than good for the community by getting involved.