Sure it does. Those kids won't play pro ball or even come close. How much value did Ron Patterson provide last year? How much should he be paid? Did anyone show up to watch him play? I'm not sure why you think they deserve anything other than an education, room and board and the opportunity to showcase their talent. What are these kids worth in college? A scholarship. That's it. If they want to do better, go play pro ball. You think James Southerland thinks he got a raw deal? He's in the NBA right now, because of his experience at Syracuse. What would he have done out of high school? What would Andy Rautins have done? He wasn't very desirable out of high school. No top schools would be paying those kids to attend their school.
The NBA would draft a high school if they though he could be a star. Lebron, Kobe, Garnett, Dwight Howard, Tracy McGrady and Amare Stoudamire became stars. But guys like Sebastian Telfair, Kwame Brown, Robert Swift, Dorell Wright, Korleone Young and Amir Johnson did not. The NBA doesn't want the kids that are not going to help them.
You don't think playing college basketball is a "fantastic alternative" to playing in Europe? I do. I bet the players agree. Who wants to play in a foreign country where you don't speak the language?
These schools are making millions off of their own names, their own tradition, their own coaches, their own venues. That players are just a part of it. And they are paid in scholarships, which is more than enough.