Having top-notch athletics can really raise a university's overall profile. Iowa is the epitome of a "safety school" - it takes tons of kids that would otherwise be Badgers, Illini, or Wolverines, but don't quite have the academic chops. Wisconsin and Michigan simultaneously have strong academics and athletics; and Illinois at least is an in-state school. Iowa's athletics and academics are decent, but are definitely a tier below UW and Mich on both counts.
Iowa is competitive most years, but lacks consistency. If it can at least make the B1G championship game 3 times a decade, and gets NCAA bids 80% of the time, a lot of those kids might put Iowa higher up on their "wish list". That means more Iowa applicants, a lower acceptance rate (to me a 75% acceptance rate isn't much better than a community college. Most decent academic institutions reject at least 35% of their applicants) and therefore, a higher academic profile (selectivity and funding are killing the U of I's academic rep lately).
Kids want to be a part of something big. If you build it, they will come.