Didn’t realize you get punished for good roster management

Yep, you may need some more depth. I only just got Malak to 7 star (just about to crack 5M roster, so way later than you I'd expect), and while my opponents vary a lot in rosters, the top heavy ones aren't necessarily the best. They've tried to encourage people to build up more teams by using the top 'X' for match making (whatever X actually is) rather than your whole GP. So build up some B teams. Has worked well for me.