Makes all the sense in the world. Many more schools should do this.
Geez, CU is in the P12 and doesn't field men's baseball, tennis, swimming, etc. It's ridiculous to prop up a football program when it's hemorrhaging money. Maybe you could run the program more like a club or high school sport on a very limited budget. It becomes all about the student-athlete (just like it is for most of the other sports). Schedule only local/regional opponents. Limited facilities and coaching/training staff. Pragmatic expenditures for equipment. etc. Basically, the original model and objectives for amateur athletics.
If I were CSU, I'd drop football and instead throw resources at building a national powerhouse with some other sport: soccer, lax, hoops, track/xc, etc.