Good business practices and sponsorships?!?

I will not name names, nor try to badmouth anyone...

DT & I have our next race on July 4th (next race to promote/direct)  It's a cycling road race that we took over from a local team who is the "host" and we are the "race directors"  I'm learning along the way because I haven't ever worked - or even been to - a cycling race. (However, the logistics are very similar to other races...) The cost for an entry is along the lines of a 5K/10K - $30ish. At first I was like - whoa! that's cheap! Then DT explained to me that racers could do a few races a week...so I understood.

I digress. So because the entry is so low and because we are donating proceeds to charity - and because of who I am - I want to reduce the costs as MUCH as possible. I won't get into the prize fiasco...one specific thing that is irking me.

Last year (this is the 37th year for the race) the race purchased lunches for the volunteers. Which isn't abnormal - the volunteers make the race happen in my mind! They are there all day - so the LEAST you could do is feed them.
They bought 36...again...not out of the ordinary. However...they bought all 36 of them for $10 each from one of the "sponsors" - who, in turn, gave them a $100 gift card.
I just talked to the guy this morning and he is willing to reduce the boxed lunch price by "only" providing sandwiches for $5 each. If we buy lunches from him he'll give us 2 gift cards for $50, if we don't we only get 1 gift card for $50. DT says "it's just business"...but WHY in the world would it make sense for us to spend money to get a sponsorship??

The cycling team wants us to use a "local" place - but couldn't I get enough food from Subway for like $100-$150!?!?