Actually, there are plenty of competent administrators who would probably work for ~ $150K plus benefits (no free house).
Having administration who are paid like landed gentry while professors and grad students are paid peanuts and students have to engage huge amounts of debt relative to their expected future earnings IS THE PROBLEM.
This is very true. We don't see too many administrators who are paid outrageously, our athletics department handles all of that. Highest paid state employee for a few years - the ex Coach Mangino.
For the big name schools, College football and basketball both generate huge revenues They are basically pro sports masquerading as collegiate activities. I don't have an issue with the coach of a team that in fact does generate millions getting a high salary. Arguably the US should have a club system similar to Euro soccer for football and basketball, or the NBA should start to pay higher than pennies for its minor league and the NFL should start a minor league limited to 18-22 year olds to groom players (NFL football is too rough for 18 year olds' bodies).
I think the coach of a football program making a huge sum is different from the administrator of a college - for one thing, elite football coaching talent is in short supply. The supply of executives who can lead a university is not. Last I checked there are plenty of executives cooling their heels golfing etc.
However I could be convinced to hold football/basketball coaching salaries way down as part of a movement to de-professionalize college athletics by sending the coaches who are really using college athletics as a way to huge salaries to the pros. The way it operates now is simply absurd, especially given that elite level players receive none of the spoils of filling stadiums during the prime athletic years of their lives.
Back directly on topic, the problem with administrators making huge multiples of professors is it is attracting the wrong kind of people, i.e. profit maximizers who figure out how to funnel increasingly large sums of money into their own pockets. As an example consider the activities of the UC Regents: http://www.metroactive.com/features/diploma-mills.html
