"Sold out" means nothing if the tickets aren't used.
Wrt building a new arena, I just don't see it. No one is going to donate/invest $100mil+ for a building only 4k-5k people will use. A new building will not cure what ails falling attendance.
Sold out means everything to the athletic department and budget. This is where the real problem is. The attendance issue- butts in the seats- isn't a simple one to solve.
I've had season tickets for 18 years and live in Tulsa. When there is an 8:00 tip against a team with 2 conference wins, it's raining, and the game is on TV, I am not real motivated to drive 2 hours and get home at midnight. It's hard to get rid of those tickets and the university doesn't make it any easier.
Attendance is on the decline everywhere, even in the NFL. TV, and even social media, is a big part of that. Everyone wants a smaller arena, but the reality is there are consistently at least 8000 tickets sold, even if only 4500 show up. Why would you have a new 8,000 seat arena if you are already selling more tickets than capacity? Personally, I would like to see them go through with the remodel of the LNC they talked about 3-4 years ago where the hired the same company that remodeled Michigan's arena. You could update it, add suites, reduce capacity a couple of thousand, add mid-level concessions and restrooms, and still be connected to the new parts of the facility on the south end. The problem with that, as well as a new arena, is there aren't donors willing to raise the necessary dollars to do either one. And the reality is, both would be temporary fixes as attendance isn't just because of where we play. It's a multitude of issues.
Bottom line, I have come to accept, as much as it sucks, our attendance in basketball is what it is. Some years it is really good. But most of the time, we have around 5K die hard fans that show up game in and game out.