I don't think they always make money. Lots of times they do, but not all the time. About three quarters of the long time buyers we know have gone broke at one time or another. They gamble for a living, and it's not always a win.
The way I see it, no matter how low a price you get, the guy who bought the animal bid higher than anyone else. As long as the bidding was honest, and the first and second bidder weren't working together, there's not much to do about it. If you're selling at an auction where there's only one buyer, or the buyers don't honestly compete, then get out of that place and find a better market.
If they're making money rerunning cattle, then whoever is selling them needs to take away the option to improve them and gain from it. The best way to get a good price at any auction is to bring cattle that don't need improving. Do that at home, and get paid for it yourself.
We buy calves to background. The ones that make us the best money are the well bred calves who haven't had their homework done. They've got horns, or they are bulls, or they haven't had ivomec, and have poor coats, and they are small. We clean them up, castrate them, grow them big enough for a big feedlot to want, and a lot of the profit comes from the cleaning up that we did. Whoever sold those calves to us gave away that extra money. 99.9% of the calves we buy, if they were our own home raised calves, would never have seen the auction at the size we buy them.
The bottom line on these calves is that we will only pay one bid more than the next bidder. That's just how it works. Even if we think they are worth more, if no one else bids against us, that's as high as the price gets.