I think this is drastically wrong, and I'll tell you why: Cash Flow. Having a positive cash flow is important in order to sustain growth and position yourself for further improvement. If you buy studs now, and it takes up all of your income in order to pay them their wages, you'll never be able to grow your arena in the future, thus limiting yourself to being a constant division 4 team. But when you invest in your arena now, you'll be able to build a positive cash flow for the future, thus allowing you to then buy the stud players you need to destroy division 4 and position yourself for division 3. You need to invest in your arena not because it's going to make you money right away, but to give you the cash flow necessary to move up into the next division.
I agree with you and am going to expand my arena to around 6500 Bleachers, 503 Lower Tier, 150 courtside and 6 luxary boxes between now and my first home game of S19. I'm already 3 days into an expansion of 550 seats that should finish during the playoffs.
It's just tough for me to not expect my team to compete right away at the next level, so I'll also spend some money on players once I get a look at my new league. With the players I have now, especially my trainees, I'm probably not all that far behind where I need to be to compete at D4.