This makes complete sense. There's almost as much too-close contact in water polo as there is in football, and you really wouldn't be able to effectively wear a mask with all the swimming. And what are you going to do- not be breathing heavily after you've been aggressively swimming around and you've just gotten your head pushed underwater ?
Water polo probably won't be the last sport to have its season cancelled. Isn't outdoor track and field either a spring sport or a fall sport that would have been played this spring? To comply with COVID measures they'd have to do something about either the types of events or the number of participants allowed in each one. Perhaps only competitions against single opponents instead of big meets ? It's one thing to hold a shotput or javelin competition, but quite another to have all those runners huffing and puffing right next to each other for minutes at a time.