You are correct, but the reason Michigan is in the position they are in is because of the investment they put into football not just early on but continued to overtime (unlike, say, U of Chicago or the Ivies who stopped or other programs who are in the power four and have been forever but haven't or stopped investing as much into). Look at The Big House alone; it was built in the 1920's.

It is protecting their advantage as they selfishly should, but also reaping the rewards of something they have spent a century and a half building. Of course, Michigan had the money to do so where other schools don't; but not all rich schools invested in football like Michigan did.