Simply being rich doesn't mean you know how to run a successful football business, and Edelstein's approach was to chuck tens of millions of dollars at superfluous shit in roughly two years in the 1980s.
Absolutely stupid amounts of money that he couldn't really afford, almost all of which was wasted on overpaying star players like Capper, expensive marketing gimmicks, decking out the club's employees with luxury goods and cars to give off the perception of being high rollers, and trying to impress the media and AFL personalities.
Edelstein had absolutely no idea how to run a professional sports team, and it very quickly became obvious that his ownership of the Swans was doomed to fail.
Depends what you mean by 'the AFL'.
I doubt the AFLC had any more intention of allowing the Swans to die than the NRL has ever had of relocating the Storm, yet despite that multiple articles have been written by prominent RL personalities advocating for just that if you catch my meaning.
Then why didn't they?
Seriously; why didn't they actually fold, i.e. close down the business, if their and other sport's position was so untenable in Sydney pre-95?
They shouldn't exist if what you're saying is true, yet they do...