He should have played! Moving him around to a different group would have had little effect on his ability to do well in the tournament. If you want to be considered a champion, you need to find a way to overcome adversity in all it's various forms. That's about as simple as I can make it.
This isn't a matter of Mike being afraid of playing the best and over coming odds. This is about mike being a stand up guy and saying he's not going to play in a tournament that is being manipulated for someone's financial Gaines.