I think the shuttering of the LA Stage Alliance is also a reflection of the current state of theatre in Los Angeles.
The LA Stage Alliance is chiefly known for presenting the 'Ovation Awards" - which is Los Angeles's version of the Tonys. As with any awards group, they've seen their fair share of drama over the years, with a number of major arts organizations withdrawing from the Alliance - either due to awards politics, or things like the semantics of making seats available to Ovation voters, which can be costly.
Los Angeles has also seen turmoil over AEA's rulings putting new restrictions on Equity waiver theatre (which in LA was mostly referred to as the "99 seat plan") which for better or for worse shuttered a number of smaller theatres who couldn't (or wouldn't) comply. Add to that the closing of many of the major Equity houses over the past couple of decades (Long Beach Civic Light Opera, Fullerton Civic Light Opera, Redondo Beach Civic Light Opera, etc.) and now, of course, the pandemic putting the lid on all live performance, you can see how the Alliance is / has been facing diminishing returns for a long time
Los Angeles, for all of its talent and its cultured population, has just never been a major theatre town. It does have one of the country's leading theatrical advocates in Charles McNulty, drama critic for the Los Angeles Times.