I don't agree with this, but personally I think MMA sparring is the best sort of sparring a person can do if they want to prepare for physical confrontation outside of class.
That is just your opinion. There are many ways in which that type of sparring would be detrimental in preparing you for a physical confrontation outside of class. It is designed for sporting competitions and not for self defence and if someone was going to use it for that purpose then they had better know how to adapt their mindset.
As for MMA taking students from TMA classes, I think that a lot of TMA schools only have themselves to blame. For too long many TMA schools have been selling themselves as places where they can make a person in to a fighting machine.
For some of the bad schools this may be true. On the other side of the coin many people seem to think that with a few months MMA training that they can beat any TMA master with decades of experience easily in a few seconds just because they saw a TMA fighter lose one or two fights in the Octagon.
In the advent of MMA and the UFC, the public are a LOT more discerning about the hyperbole and marketing that many TMA schools use.
True but people also seem to believe every thing they see on YouTube about MMA versus (insert art here)somehow 'proving' that TMA's are somehow ineffective/useless.