I have no inside info but here is my guess about how the process would go year to year.
1. They have a ticket renewal deadline. Say March 1. Around the Jan 1 they would send out a form asking if you are going to renew and if you are, do you want to keep your preferred seats, do you want to upgrade to a higher level of preferred seats, etc.
2. When the ticket office gets all the forms back or when the deadline reaches. They go though and release all the non-renewed seats. For simpliticy sake lets say 4 seats come open in the front row of the $500 preferred section, and that's it. Then they take all the current $500 seat holders and all the from people who say they are willing to give $500 per seat. Compare Gopher Points and the highest group of 4 or 2 groups of 2 will get those seats. Then they procede to move people into those seats that were vacated by people moving up. When they get to the end they take the person with the highest number of Gopher Points who currently don't have $500 seats and they get the 4 empty seats.
Repeat process for $250, $100, and non-donation seats. If there is enough demand I would expect the Athletics Department to add more seats into the Preferred Seating Catagory. Also I would guess the amount would increase over time. Lets say in 10 year the $500 seats are now $550 small things like that.
So I would think as long as you continue to pay your yearly fee for for preferred seats you will move up slowly.