Any large organisation will develop a large support infrastructure. This has its dangers. For example, the central bureaucracy can start running things for the benefit of the central bureaucracy - the accountants are on tap, rather than on top. For an organisation that can't go broke - e.g. a university - this puts in a danger of forgetting that the main purpose is to educate and to research. If the educators and researchers are put second best to image and publicity, short term gain will become long term pain. I can sometimes be heard grumbling about a lab that has single glazing rather than my desired double glazing because changing the window during the refurbishment would have "changed the external appearance of the building". I don't see this as a reason not to go ahead - the purpose of the building is to do research. The central authorities did - presumably this is an image and appearance thing, ahead of research efficiency (and energy efficiency - there is a breeze in my office (similarly benighted with single glazing) with the window closed. How much energy is wasted heating this room?)
Reading the NY Times, there are much larger illustrations of this - the US Ivy Leage university, Rutgers, has spent millions trying to become a major power in college American Football.
Now, it is not that Rutgers American football team has a large budget that is the problem. If this budget was raised from the gate receipts of people who want to watch the team, and from TV revenues for broadcasting the team, then I would have no problem with them spending this money on the team, even if that results in the team coach earning more than the professors (although how many professors would swap their tenure for the instability of a sports team manager?). This money has come from the sports fans, and so can be spent on giving the sports fans what they want. I don't see it as a necessity that income from this should be taken away and given to research any more than income from filming soap operas should be taken away and given to cancer research, except via standard taxation.
It is not even that they're spending money on something other than pure teaching and research - extra mural activities are an important part of many a students time at universities, and many employers look very favourably at the appearance of a sports team on a graduate's CV as a demonstration of commitment and team work. It is that this is *all* about image, and not about education. How much more education does the average player get on a college American football that has a winning record? How much more benefit could that money do in keeping tuition fees down, budgets up, even in supporting a much larger number of students in less high-income sports (e.g. rowing, swimming, athletics) or student theatre, music, art etc?
This can't be defended as education of rounded students. It is because someone in a big office has decided they want to see Rutgers name up in the top flight of college football. But he has forgotten what a college is for.