I disagree. Schools were founded on the principle that the best and brightest minds will teach the new generation (this goes all the way back to Athens). If you separate the researchers into a "research university" and the other students into "trade schools" eventually you'll just make the class divide all that much worse because the lower tier schools will attract only those teachers who are more interested in pedagogy than the subject, or who themselves are not as qualified.

If you were a student (or the parent of a student) looking to advance in your field, and you had the choice, would you choose Harvard or say a local community college trade school? It's easy to make massive sweeping sociological choices for the public without considering that you yourself would not make that choice. Obviously, multiply your preferences times every student in the field.

If you want to say there's a funding crisis and you want to deal with that funding crisis in some other way, then yes, I agree.

Also, I don't personally care for sports. I still think they have a place at a University, just not to the extent that they're funded. If independent undergraduate research projects were awarded (and advertised!) with the same funding as sports teams and sports teams had their funding lowered, I think that might be interesting. Incubator lab competitions in science research projects that would have the results published in journals. Start up accelerators with paid promotions etc etc.

How else to organize the budget at universities I don't know how to speculate. It means that with a finite amount of money some resource is getting cut somewhere and someone else is having an increase in endowment which gets super political. I'm also not necessarily sure that cutting liberal arts is a good idea. Many of the people I went to school with (at least one I helped pass advanced maths...) spent the majority of their time drinking and ended up working in investment banks. Forcing them to read a little poetry or sit through a lecture or two on a few sociology courses is maybe a good idea so that when they're out there ruling the (financial) universe they have a bit of awareness of the way the rest live.

My thoughts for what they're worth.