Here's the simple reason Bellator cannot compete with the UFC: they have a tiny fraction of the budge.
Now, that gap is starting to close with UFC slashing their budget all to fuck, but unless Viacom decides to take a risk and open their wallet, Bellator is going to have to pick and choose which name free agents to go after. They went all-in for Rory MacDonald but offered Aljamain Sterling barely anything. They've spent a ton of energy on Ryan Bader but Misha Cirkunov quickly slipped through their fingers.
They just don't have the money, and on top of that they're on a network that's in a bit of a downward spiral.
They also have lesser problems, like not being able to monetize their prelims (or even use them to promote prospects except to a few thousand internet viewers), having those horribly stupid "postlims", and being on a network that's kind of in a downward spiral, last I checked.
They also have some of the same problems as the UFC and any number of orgs in that they can't always give their fighters enough fights.
Then again, I'm not sure anyone would have predicted that the UFC would be bleeding talent this badly. It's not exactly Bellator's fault that there's just too many talented name fighters to go after these days.
