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It is called cutting off your nose to spite your face.
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It could be that it's too much work to check the types of sites and how sites link to them.
They are paying cash, (PPC), for thoses Keywords and don't want to be out-bid.
They'er scared that others could do better
SEO than them. The story could read "10 year old kid does better than XYZ in
SEO,".
As you say:-
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I once had a boss get upset at the amount of commissions I was making in his retail establishment.
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Maybe this is why Google only allow 3 adsence blocks per page. :-)