Sega has all the rights to shut down this project.
Actually, every company has the right to shoot down fan contributions and defend its own stagnation through hamfisted legal tactics, worrying about potential to make pennies first and tossing away every potential there is to gather new people, new ideas and actual passion and maybe have any hope of returning to past glories.
It's dumb to the point of being suicidal, both in terms of actual ability to release quality content and uphold a reputation that can't be resumed with "Terrible", but they can do that, and no amount of whining will change it.
Don't be angry at Sega, it's pointless and most importantly it's not even news anymore that they're a bunch of idiots devoid of any form of creativity and common sense. You should be mad, mad like hell, at investors that actually keep dumping money in a company like this; they're the one that keep it alive and keep allowing this crap to happen.