He is both right and wrong at the same time.
Right that there are too many clubs in Melbourne so the smaller VFL clubs are always going to have to make up the numbers in a sense. And there is no commercial incentive to have all of these clubs up at the same time or for long periods.
Wrong from the perspective that the Saints have had the worst drafting of any club in recent memory (which is why their list profile is god awful), have hired a coach who plays a brand of footy which isn't commercially attractive to the networks and are a club that gets significant financial contributions on par with the northern clubs to stay financially competitive.
If the AFL was completely starting from scratch I think it would be closer to this
Victoria - 6 teams
Western Australia - 3 teams
South Australia - 2 teams
New South Wales - 2 teams
Queensland - 2 teams
Tasmania - 1 team