It became a tourist trap in the Roman Empire
The decline began after Battle of Leuctra where Sparta was crushed by Thebes in 371 BC.
In 338 BC they tried to make a comeback against Macedonia under Phillip II (father of Alexander-the-Great). You may know that story where King Philip II sent a message to the Spartans saying, “You are advised to submit without further delay, for if I bring my army into your land, I will destroy your farms, slay your people, and raze your city.”, and the Spartans responded with only one word; “if” (or the Greek equivalent). Macedon followed through with the threat.
In 192 BC Sparta lost its independence when it was defeated and annexed by the Achaean League.
On 146 BC the Achaean League was defeated by the Roman Republic, and thus Sparta became Roman territory.
The Romans were fascinated by Spartan culture and thus made Sparta a free city, an independent city state that was permitted to have its own laws and customs under the supervision of a Roman government, backed by Roman auxiliary troops. In 31 BC a wealthy Greek named Gaius Julius Eurycles led a small force of Spartan ships in support of Octavian at the Battle of Actium. When Octavian became Augustus, the first Roman emperor, he rewarded Gaius Julius Eurycles by installing him as the vassal king of Sparta. He was a puppet king like King Herod was in Palestine. Officially, he ruled Sparta, and taxed them grievously, backed by Roman troops, founding a dynasty that ruled Sparta for the next few centuries.
Spartan culture and customs became a part of Roman pop culture. The emperor Caracalla ( a fan) incorporated a 500 man cohort of Spartan hoplites 214 AD to serve as a component of the Praetorian Guards. Realizing the opportunity, the Euryclid Dynasty capitalized on the Spartan legacy by reorganizing their city into what was essentially an ancient Roman tourist trap. The city had most of the things Romans enjoyed such as games, gladiatorial combat, theater, baths, brothels, and taverns. Like most other tourist hotspots there was probably a proliferation of tacky trinkets for sale.
As much as a visit to Spartan Land was a hit, the Romans were most interested in Spartan warrior traditions. The Spartans organized a show and wealthy Roman tourists paid to see it. The hottest show in town was the Spartan coming of age ceremony held at the Temple of Artemis Orthia were a Spartan boy would be whipped to near death, at which point if he survived, he would be considered a man and a warrior. The Spartans rebuilt the temple into a theater so that large audiences could view the ceremony. Watching children being beaten to near death was as entertaining as watching Christians being fed to the lions in the Colosseum.
As a popular tourist destination the city thrived, prospered, and grew wealthy. But good times don’t last forever. During the Third Century AD the Roman Empire was racked by civil war and tourism declined. By the Fourth Century, the Empire converted to Christianity, and in 381 AD, Theodosius outlawed public pagan ceremonies and orgies.
In 396 AD, the Goths led by King Alaric sacked the city, and its in inhabitants were taken prisoner and sold into slavery. And that ended “Ancient Sparta”. You can still visit Sparta when in Greece but there isn’t much to see other than the ruins of Spartan Land.