Are you saying college athletics are not already governed by arbitrary rules? When you can contact a recruit. How much you can spend on their visit. Etc. Rule book a thousand pages thick.
Yet you want to object to rules as if its some free enterprise system? Its not. And by the way, even free enterprise pro sports have exactly these types of rules. Salary caps. There is a reason.
Its not about banning the waterfall. Its about regulating the spending and/or balancing it so the excess goes into productive higher education avenues (like tuition for regular students) rather than gluttonous things like waterfalls. Keep an even budget across teams and they can spend it where they want. Like a salary cap