I was able to confirm the theory. When you have more than 30 Admin Areas occupied and no city's, you are not permitted to cap a city or respawn. When you demo the 30th Admin Area and reduce your Leadership Points to 29, you will be prompted with a warning similar to when you are demolishing a city. I'm not sure if this is by design or an unintentional consequence but I'm very happy I know now. Hopefully we can get the word out to reduce frustration.