One word can explain all of this: MONEY.
Universities have simply become professional sports leagues, where they can justify not paying the players a dime since they aren't a business but rather a school, regardless of the fact that education has been sidelined and school executives are rather well compensated to put it mildly. When the average person even talks about a university, its not "oh I heard they have a great engineering program there", for the most part its "oh the Blue Devil's had a fantastic year last year" followed by even knowing the names of all the players and coaches.
$2 billion in revenue, with Longhorns number one with massive revenues, $46.2 million dollars last year alone with $8 million in merchandise and $12 million just for premium seating, and the players don't get a cent even when their likeness is used in games by EA Sports (unlike say Tiger Woods that they have to pay millions to), making it oh so profitable.
http://video.forbes.com/fvn/sports/mo_yescollab091208
When you have such a tremendous cash cow, there is a almost insurmountable need to look the other way when star players or worse coaches are behaving inappropriately. That person is no longer an individual, but represents tens of millions in revenue that the school and its staff are dependent on.