BYUtv likes broadcasting this kind of stuff, as it gives them good content for their platform, so they don't mind the production costs — that's not a concern.
As for selling out the game, give away cheaper tickets to families with kids and build up the new generation. BYU has done that in the past and still nearly sells out these exhibition games.
Really the only reason is KY wants to limit scouting tape on his team, and personally I think that's dumb. There will be plenty of tape on us by the time anyone good is playing us.