Agreed about doing it around a football game. Offer free pop, hotdogs, popcorn, etc. to get people in the doors. Hell, even take a few $ out of the athletic dept, get a 'name' band (Oliver Syndrome? Just kidding) and make it an 'EVENT' people are excited about.
This has been done before multiple times.
The problem is - what do you want it to be?
-For the (dwindling) number of schools that still do it well, it's typically a big, hyped up event that is heavily student focused (although when you're talking 10,000+ arenas there are still a lot of general fans - the students make the atmosphere though. That's not happening before a football game.
If you don't fill up the space, it loses its atmosphere. It's no different than an actual game. A half-full arena with people spread out doesn't get as into it. Mackey, even after being renovated, still is not a very high-tech arena and the lights don't even have auto-covers, which makes it hard to have a good atmosphere around an event, let alone a 21st century sound system.
And then there's the programming. The last midnight madness Purdue held was basically a hot mess. Having a low-tech arena hurts in terms of this as everything is on display at all times. Scrimmages are often boring and not much to see.
On the basketball side of things, they only want to do it if it's going to be impressive, particularly for recruiting. Having 1,000 students in Mackey doesn't make the place feel electric. That's why I suggested doing it in the practice gym - pack the place with students, it's a small enough space you can create a great atmosphere in terms of lighting/sound, etc.
The problem is Purdue doesn't want to put any money into it. Places like Kentucky, Maryland, Michigan State - put money into staging, lighting, effects, etc. Georgetown and some other schools have a pretty legit artist perform every year that attracts students.
You're not going to have an amazing event when you put no money/resources into it. And I'm not just talking about a car dealership that agrees to give a new car if a kid hits a halfcourt shot. There's cheaper ways to do it (like using the practice gym), but it requires effort. Purdue doesn't put that kind of investment into things for marketing (and it's not necessarily the marketing dept's fault).