Sac State's bid for the Pac 12 Thread Memorial Auditorium is better suited as an event space for graduations,plays, or concerts-events where people are using the stage. In it's current configuration it's not well-suited for basketball.
Cost was likely a huge motivation to move the games back to campus. I think I remember someone saying they were trying to get more students to attend. It is over 3 miles from the school. That said I think it really was about money. They had to pay for the upkeep of Hornet Gym regardless of whether or not they played games there, so why not use it and stop paying to use a venue that was too large anyway ? I believe Cal State Bakersfield came to the same conclusion with its basketball arena.
In my opinion Sac State will always have problems getting students to attend most sporting events regardless of where they're hosted. This is just because it's more of a commuter school. People don't have time to hang around school as much when they have jobs/families to support/they live off-campus. The notable exception is football (especially the Causeway Classic). That it's largely a barbaric sport, full of yelling, hitting, and tackling, played on Saturdays, gives it a wider appeal. Also, the Causeway Classic always draws out the low-brow types who just want to get drunk and be nasty.