Clearly, many existing bus routes would not make a profit, and would be unable to make a profit--and yet they continue to exist because of an operating subsidy. In Utah, each city contributes to pay UTA, and on the basis of that contribution, they get a certain number of buses, or a certain amount of TRAX. UTA is pretty scrupulous about matching the amount of transit a city gets to financial contribution its tax assessment makes. More central cities (Murray) get more frequent 'through' transit service, while cities on the periphery (Riverton, Herriman) are forced to content themselves with thrice-daily commuter buses.
In a sense, each city 'buys' transit service, and has some say about where that transit service goes in the city. But that 'say-so' is often contrary to technical considerations about alternatives offering the best ridership. If a city wants bus service to run to its 'historic downtown' as opposed to the new Wal-Mart on the edge of town, it is going to pay for that choice in lower ridership and lower fairbox recovery.