I don't think Varsity is being cynical. I believe they generally want what is best for the athletes and the industry. However, they are in the event producing business and that is driven by entry fees. Bigger events = more revenue and more bids is more incentive to go to their various competitions (and away from the independent event producers). Bigger events also offer more opportunity to advertise their other products (uniforms, shoes, etc.). In fairness to Varsity, the event is actually well-run and enjoyable for the most part.
I think has added some prestige to the end-of-year event, but it has diminished the prestige of most of the "regular" season events in the process. I hate to see teams win at a national championship that used to be their main goal and be more worried about how their score compares to someone in another division in another hall to find out if their name is going to be called out on a website the next day. I personally think that is a net loss for the industry.