Sunday will be remembered as the day the United States women’s team hit rock bottom. In truth, it was a long time coming.

USA’s last-16 elimination at the hands of Sweden in Melbourne marked their worst finish at a major tournament. The United States had won four of the last eight World Cups – including the last two – and had never finished worse than third.

Nothing about their performances in the group stage at this World Cup suggested they were defending champions or the longtime gold standard of women’s soccer. The US avoided a group-stage exit by the width of a post against Portugal. They lived by the sword, and they died by it against Sweden.

Related: Megan Rapinoe: penalty miss in World Cup shootout loss was ‘dark comedy’

A computer-generated image showed Lina Hurtig’s winning penalty for Sweden was over the line by a millimeter – if that – and USA’s long run of fortune finally turned. This could have been the Americans’ fate in the 2011 World Cup quarter-final, when they were saved by an improbable Abby Wambach equalizer against Brazil and advanced on penalties. Megan Rapinoe served up the cross for that historic goal, a moment she still talks about today. On Sunday, in her final game of significance for the US, Rapinoe skied her penalty over the bar – a moment she described as “dark comedy” – in the shootout.

Now the Americans are faced with daunting questions. Is this the new reality? And, if so, how do they correct it?

Nobody wins forever, and the US are not immune to that fact, even if the jingoistic narratives around the team suggest the Americans’ hope, belief, and mentality will prevail until the end of time. They did not, to no one’s surprise, and they will not going forward – not without tangible improvements from the players. There has always been a fallacy in the idea that Americans somehow want it more than players of other nationalities. Players, it should be noted, who have also worked their entire lives to reach a World Cup.

The real reason the Americans failed at the 2023 World Cup was their tactical inferiority and inability to solve problems during games. Those underscore failings with both the coaching and the player pool, and neither of those challenges are unique to this World Cup. USA head coach Vlatko Andonovski has failed to establish a clear identity for the team since taking over in 2019, but he also worked within a system that had been on the wrong course for a decade.

It’s worth noting that USA were only narrowly on the wrong side of what could have been a very different narrative. Their 7.8 expected goals in the group stage ranked behind only Japan and Spain in the 32-team field, per FBRef. A victory over the Netherlands in the second group game would have completely changed the trajectory of USA’s tournament, including avoiding world No 3 Sweden in the Round of 16 (although there’s no guarantee the Americans would have beaten South Africa at the same stage). And, yes, there is a world where likely starters Catarina Macario, Sam Mewis, Mallory Swanson, and Becky Sauerbrunn were not injured – although every team at this World Cup can point to injuries. The new world order is such that they – and Germany, Brazil and others – can no longer get away with having a bad day.

Another cycle of the US grinding their way to a World Cup title would have yet again papered over flaws, exacerbated the cliche about superior mentality, and delayed the inevitable. As with the men’s team when they failed to qualify for the 2018 World Cup, this should be the overdue moment when a rotten system is blown up.

Andonovski frequently batted away questions about the world “catching up” with the US, and reminded us that teams have already done so. Other federations have invested in professional leagues and player development. Coaching acumen has evolved alongside player talent. The US started further along the track than most of the world when it came to women’s soccer. But they have recently been caught and, in some categories, lapped.

Americans were early adopters of the women’s game – at least in the modern era. Title IX served as a boon to women’s soccer in US colleges when it was codified a half century ago. USA won the first official Women’s World Cup in 1991, then captured the world’s attention on home soil in 1999. Most other countries refused to invest in – or recognize the full value – of their women’s teams.

Now, however, women’s soccer is considered one of the hottest properties in sports. Valuations of National Women’s Soccer League franchises have rocketed in the past three years. Investment is happening in the international game, too, where even non-traditional powers like Morocco have ploughed millions of dollars into their women’s teams. US Soccer valuing its women’s team is no longer an anomaly. (That, by the way, is a point that players and their federation embraced as a byproduct of their six-year equal-pay fight.)

More countries are developing players from young ages, unrestricted by the college system that exists in the United States. Spain has clearly been the emerging power of the last decade (if its federation leaders can get out of their own way). They’ve won multiple youth world and European titles over the past decade, and they’ve adopted the men’s system, where the best teenagers are developed within a professional environment.

That is not the case in the United States. The US have never won a U-17 World Cup; in fact, they’ve been wretched in the competition lately. Their last U-20 title was in 2012. Julie Ertz and Crystal Dunn are the last ones standing from that squad on this senior World Cup team. Youth tournaments are about development more than they are about winning, but USA’s performances at those tournaments have been a clear indictment of the player pipeline and the federation’s coaching philosophies.

Lindsey Horan moves to Europe as an 18-year-old in 2012. More recently forwards Alyssa Thompson and Jaedyn Shaw turned pro before finishing high school and had the benefit of landing with two of the more progressive NWSL teams in Angel City and the San Diego Wave, respectively. But those examples are the exceptions rather than the rule in the US, where most players go through the amateur college system – which varies widely in quality – before turning professional.

And the NWSL is still playing catch-up with big European clubs. Youth academies and reserve leagues have been talked about for years without action and are now supposedly high on the boardroom’s agenda. It’s all reactionary, which is a microcosm of the US soccer landscape at large. The fractured youth landscape is no less divided now than it was a decade ago, and that’s before we mention the unchecked abuses of power exposed by recent investigations. The college system that has long served as the development pipeline to the national team is being blown up in real time at the hands of men’s college football and greed, and teams from Europe to Mexico are offering pay and opportunities to attract top teenage players.

There is still plenty of talent in the US, but players need a better environment to improve their game. What does a USA player look like? How should a USA team play? Can anyone answer those questions with more substance than intangibles about “athleticism”, “grit” and “hard work”? And how can there be a unified vision in a country so vast that the answers to those questions vary from one town to another? None of these questions are new.

The Paris Olympics are less than a year away, and the 2027 World Cup looms large. There’s a strong chance that the next World Cup will be played in the US, which will present this generation with a new level of pressure as they carry the burden of atoning for this year’s failure.

It is not that the US are suddenly terrible, but they are no longer a sure bet to dominate. They can – and should – contend for titles going forward, but without addressing systemic flaws, they run the risk of mediocrity by their own high standards. An exit in the Round of 16 – even if it comes after a strong performance against a very good team – is an unmitigated disaster.

New sporting director Matt Crocker has a monumental task on his hands to assess what went wrong at the top, while also diagnosing the problems at the grassroots. The latter issue will take years to address – decades if done wrong.

What was good enough yesterday is not good enough today. The global landscape has changed and US women’s soccer needs to adapt.