There is a third reason - there has been a lack of talent coming from WI and MN the last 6 years.
Yes, there have been a handful of really good players, but most of them came from Catholic families and went to Catholic schools and when you're a Catholic family and Notre Dame comes calling... it's really hard to say no. The other really good player went to Ohio State. And Ohio State and Notre Dame have a lot bigger NIL war chests than UW has.
The few other top recruits went to HS their last 2-3 years in WI but didn't grow up there, so there wasn't the history of watching the Rose Bowl teams and JJ Watt, Russell Wilson, etc. No emotional connection to UW, it's just another school near where they lived at some point in their life.
But behind those guys there has been a big dropoff in talent. There hasn't been the underrated mid-3-star to high 2-star kids that filled the roster. Some of the others (JP Benzschawel, etc.) just didn't pan out.