There are many reasons why FMW went under. Many people will blame it on Kodo Fuyuki's direction he took the company when he received the booking power in 1999 after Go Ito would be fired. Many people wonder why Atsushi Onita who created the promotion himself would be shafted over someone who by many people consider a fat guy who was never even a good worker. 
The reason was because when Onita came back in late 1996, and wanted to go back to his style, a style that fitted him, and was known for drawing huge money. Well after awhile that style just began to wear off, it had been done, and was killing so many of the wrestlers bodies. And on top of that, Onita was becoming very disliked by just about everyone in the promotion including Hayabusa who was being knocked back to midcard for Onita. 

Then on September 28, 1997 is when the decision to really change happen, after spending so much money on bringing the likes of Ken Shamrock, Vader, Kenta Kobashi and Terry Funk in and just filling the lineup with big matches including a huge bomb to blow up the caged feeled ring for the main event of Onita vs. Kanemura, they still came up 10,000 people short of a sellout, only filling up about 80% of Kawasaki Stadium when the thought going in it would be a huge sell out. 
It wasn't, and FMW would go on and begin to struggle with Onita as their top star not meaning as much as he did due to losing apart of his drawing ability when he retired on 5/5/95. 

Arai wanted Hayabusa to return back as the top star, with Onita being under him and they would feud with Team No Respect. Onita's vision didn't fit that, but Fuyuki's vision did, and as a result, Onita would begin doing more and more jobs putting over Team No Respect and then Fuyuki on 4/30/98 while Hayabusa would win the Double Titles on 4/30/98. Onita could not work with Kodo Fuyuki anymore. Onita vs. Fuyuki rematch for 11/20/98 was pulled off, and Onita announced he would leave FMW and start his promotion USO, and Fuyuki would get himself the Double Titles over Hayabusa on 11/20 where Onita would get his last match against Mr. Pogo in a awful match and by the end, no one cared about Onita in FMW. Several months later, business would begin to go down, in early 99 they were struggling big time during houseshows and they had a show booked later in the year at the Yokohama Arena, and the Hayabusa character was losing interest from the fans, and as a result, he was booked by Go Ito to put over Hisakatsu Oya, Mr. Gannosuke, and Tetsuhiro Kuroda. 

By the June 1999, Onita's long time buddy Go Ito was fired as booker by Arai and the spot was given to Fuyuki. Fuyuki's direction was that he wanted FMW to be different than each and every promotion but still put on solid matches, he would go with the Entertainment route since the WWF was doing so well with in in America. A bad mistake, but a mistake that was never going to kill the promotion. Eiji would asks Fuyuki and Arai for some kind of change in the Hayabusa character, and the whole H character was decided upon seeing that the Hayabusa gimmick had ran its course, but the H character would still have to unique which was the reason for the design, and would be more of a vicious fighter. The H character never took, it wasn't as bad as some people say it was, it didn't hurt attendance because it was still Eiji Ezaki, but it just didn't compare to the Hayabusa gimmick and just wasn't as over, so they decided to drop the whole idea and decided to turn him into Superstar Hayabusa. The Fuyuki/Arai put on a successful Yokohama Arena show on 11/23/99 with the Entertainment style booking, and everything would be going fine until late 2000 when just the years of doing the highflying maneuvers as Hayabusa was too much and he needed to take 6 months off to fix his arms, and Mr. Gannosuke who had been having personal problems throughout the entire year with injuries and medical trips to the hospital needed time of as well. So they let Kuroda become the top star with the hope of establishing him as a top star with Fuyuki, Tanaka, and Kanemura helping keep the attendance up. 

Well they attempted to run as many as many houseshows as they would with Hayabusa/Gannosuke on them and that was just a mistake, as the shows did poor numbers and they would lose a lot of money, causing Arai to offer anyone in the locker room a chance to leave with Tanaka taking the offer and getting his friends Jado, Gedo, Hosaka, and Nakayama to go with him. Hayabusa and Gannosuke would come back for a financially successful but heatless Kawasaki Stadium show, and then run a very successful show with Hayabusa vs. Kuroda on 5/22/01 at the Sapporo Green Dome. 

Everything seemed to be fine until October 22, 2001 when Hayabusa became paralyzed after slipping on the ropes, and landed on his head after an Asai Moonsault. All signs it seemed like FMW had lost Hayabusa possibly forever, and many fans that only came to see Hayabusa, or can't watch an FMW show these days without thinking about the pain that Hayabusa is suffering. FMW tried not making the mistake they did last year without Hayabusa of running as much shows, so they only ran at Korakuen Hall, but those shows weren't even doing good business, and when nothing they do is right business wise and they're losing so much money to the point where they can't pay their wrestlers fulltime, that's what happens. It's a sad occurrence, many mistakes were made, many accidents happen, and too much money was lost from a promotion that was never financially backed by a person with that much money. Just about every FMW wrestler won't have a hard time finding work, while some may have to go to a promotion like IWA Japan, Michinoku Pro, and DDT, others will get into All Japan, NOAH, and New Japan. Hopefully FMW will run a March 10th Korakuen Hall show, and hopefully Fuyuki does put over someone, and maybe even Atsushi Onita could appear one last time for the promotion he created.