It isn't about the state being doomed, it is about what is best for the state. Protecting / adding a $20 million per year business to the state is good for the state. Period.
Noone has said that the state of Iowa doesn't give money to ISU that ends up in the ISU athletic department. If I remember correctly, the state of Iowa supplies <10% of the overall ISU budget. So, if the ISU "shortfall" is $1.5 million, that would be about $150K that comes from the state to the Cyclones. How many taxpayers are in the state - 1.5 million? So, it costs each taxpayer about 10 cents. I bet that if you took 10 cents off of your tax payment, the government wouldn't do much about it.
The profits of the BTN do subusidize the UofI athletic programs to the tune of $22 million. I end up paying 85 cents a month to that subsidy program.