a lot of this is michigan (and northern) arrogance. there is little difference between rural michigan, ohio, and pennsylvania and much of the south. ohio and pennsylvania are football hotbeds too. there are plenty of pro teams in georgia and florida. there are probably more businesses headquartered in atlanta than detroit, not to mention texas is about to join the league. is there a huge intelligence difference between austin and the hallowed halls of ann arbor, michigan?
michigan continually got top ten recruiting classes (many times top 5) prior to NIL. once nil kicked in, michigan refused to play and has suffered.
meanwhile, the schools michigan considers to be its peers: notre dame and penn state, have caught on and are paying to play. michigan hasnt. the "ohio state is a southern school" thing is a crutch for michigan to use to excuse recruiting failures, but its not really true. its "proximity to kentucky" is a meaningless strawman considering indiana and illinois are both located in areas you would likely consider "northern kentucky" and yet they suck at recruting (and yes they have rich graduates too).
and finally, michigan's own history belies any idea that they cant compete on the pay for play front. unless you've forgotten the Fab Five?
michigan football is a national brand. it will continue to be a national brand if they choose to play by the new rules. if not, they can choose to be northwestern.