Intriguing question. Bear with me, it'll be long winded and may not actually answer your "business proposition" question.
I also ran track like
@hurdleisu24 . I received nothing and got tired of losing so I started winning. Winning turned to money. I got lucky, so many of my teammates were not as fortunate as me financially but that did not stop them from representing our school each week. To say I ran harder than them because I got a scholarship is naive. That is part of your answer. Just because 1 sport isn't revenue generating doesnt mean that athlete does not compete just as hard in the field of play and represent (call it marketing if you will) their school.
2nd part. The 1st thing I immediately thought of was : curious what is your age is? I suspect you are less than 45. I remember the Jim Walden Era football. You can not tell me at all the Athletic Department was fiscally positive- if it was, football sure as heck wasn't positive. Should've Johnny Orr and Basketball say cut football spending? Should've any of the science and engineering revenue generated from national research go to a losing football player scholarship? No, that would be unheard of!
3rd part. I'm now a cattle farmer. I don't feed cattle soybeans- but I grow them. Most years I could make more money just growing corn. Yet I divide the acres into corn, soybeans and hay. Hay is a non revenue crop- but I have to have it for the good of the whole. Soybeans are grown for soil fertility so corn can be grown better, more efficient.
Long answer I get it, but the short answer is everything has a moving part and the moving parts together drive your machine. In this case, the machine is a business known as Iowa State.