Yeah they need to review the cup. I've only ever had one Final (season 2) and one SF (season 9) but loads of early round failures. I don't see things improving either the higher level up I progress. I always end up playing teams 2 or 3 levels higher too. You're right in that there seems little incentive to improve your team but obviously to compete in the league you have to if you want to level up. Maybe in your case this would be a good season to tank.
FC Loella. Server 121. Level 13
10 League Titles
2 Champions Leagues