[lmm]

> How does adding administrative bloat increase revenue for the university?

It doesn't, but administrators' salaries aren't really connected to the university's revenue. (And if they were, they'd probably focus on building more stadiums, selling more merchandise, and doing more advertising for deep-pocketed sponsors).

> It allows them to win more prizes, to cultivate and educate PhD students who can go on to become successful (to the credit of their PhD-granting institution), and educate undergrads (which can lead to more donations from parents or from grateful alumni).

The feedback loop for publishing better papers -> getting a better reputation takes decades, and it's not even clear you'd end up with more revenue at the end of it. As for attracting donations from grateful parents and alumni, the most effective way to achieve that is lowering your grading standards.