Isn't this a flaw with the martial arts?

There is no flaw, the only flaw is in your perception. You are confusing sports with the Martial Arts. MMA is a sport, as with all sport which require physical athleticism to excel, the younger you are the better. Martial Arts on the other hand is a way of life, as long as you consistently train, like wine, the older you are the better you get. Think of it this way, athletes are like paramedics or rescue workers and martial artist are like doctors or surgeons. The younger the rescue worker the better since, they have to stay alert and go out into the field everyday to rescue the wounded and possibly carry them back to the medical facilities, but surgery on the other hand relies on skill and experience which a young rescue worker or a young doctor probably does not have, so the older and experienced the surgeon, the better the chances of saving the patient.