I don't really have an opinion on this issue, but since my BF's mother worked as the athletic department office manager at a state university until last summer I learned some really interesting things about the subject. Schools don't really make money off of these sports. They have to pay for facilities, equipment, travel, and plenty of other things. The money that is extra over cost from big football or basketball teams goes to pay for the other sports at the school. This article, Myth: College Sports Are a Cash Cow, has some interesting information about the college sports system including:

What sets UGA athletics apart is that it can pay for its expenses without turning to the university for help.
Only seven other athletics programs at public universities broke even or had net operating income on athletics each year from 2005-2009, according to data provided by USA Today to the Knight Commission on Intercollegiate Athletics (for which I consult).

But don't think that getting rid of sports is a solution. Alumni are major donaters to their alma maters. Those funds are very important to the schools and would shrink drastically if a school tried to do away with sports. All those campus buildings have funny names because they're named after the people who donated large amounts to build them.

I'm commenting because this morning I ran across this article discussing the lawsuit which I had not heard of before. It includes the court papers from the lawsuit at the bottom of the article.

And just for fun, check out this map showing the highest paid state employee in each state and some commentary on it. A lot of the money generated by the sports goes into these salaries. Cutting their pay doesn't really help the problem since having a great sports team is a great recruiting tool (more students = more money) and makes alumni happy enough to open their pocket books a bit more.