It is all quite complicated. And you can read the thread here if you want to see more information.
But a lot of it comes down to RECF/VEX investing a lot of money into building a new “AI system”. The universities teams I would like to see in the AI program are all serious schools and full of students that want to learn everything they can. They are taking college courses that teach stuff like computer vision, AI, and machine learning; they want to use the knowledge they are learning. People like that don’t really want the VEX AI system. So the RECF has spent a ton of money buying hardware and developing software that these teams don’t really have huge interest in. (which isn’t to say no one wants them)
So what happened is RECF wants 2500$ for registration + hardware + software + support. Lots of teams want a way to just register, like all the other RECF programs.
RECF believes that given the money they have already spent building up the system it wouldn’t be in their best interest to let teams just register. Otherwise they believe they would have no chance of recouping the costs they spent building the system. (read up on sunk cost fallacy if you are curious)
There is a belief among the teams that a lot more teams paying 500$ in registration might help the RECF offset costs more than less teams paying 2500$. Without estimates of number of teams that is clearly impossible to know.
The ultimatum is really in response to attempts to negotiate some middle ground. The official RECF response is “take our initial offer or leave”