I think he's saying that the AD should not be independent, and viewing it as independent from the rest of the university is actually part of the problem.
I will say that I do tend to think that the school has gone way too far down a road of treating various departments as "independent" entities with their own independent P&L statements, and that problem extends well beyond athletics. Why was the J school closed? Because viewed as an independent entity, it didn't turn enough of a "profit."
Even some of the academic prestige of the schools is in a very precarious place because of this idea of every group operating independently and trying to get to a "profitable" or at "break even" place. You can get to breakeven by increasing revenue or decreasing costs, so... well, several of the nobel prizes claims were won by guys who were getting their paychecks from the federal government, not from CU (and no, not the circuitous "USFG giving grant to CU that then used money to pay professor," nope, those guys were de facto and de jure direct USFG employees). Having your most valuable employees not actually be employed by you seems, well, not ideal.
Well run organizations (including large businesses) know that some units are more profitable than others and other units will rarely, if ever, turn a profit, but still they all contribute something to the success of the entire enterprise. When they are broken down into independent silos and evaluated solely on a bottom line basis, it rarely turns out well for the whole. That process can be a useful management exercise to help better see the big picture, but like all useful management exercises, when it's taken too far and for too long it ends up causing more harm than good.
@dio is right about knocking down walls between organizations, but how about starting on the Boulder campus and move out from there? None of the schools and departments could succeed on their own, so start tying all of the successes and failures together - because in the public's mind, they already are.