The fact is, M students don't knife opposing fans just for wearing their gear. So if M's justification for the rule is safety, it fails because it's unnecessary.
Regarding who is in the audience, keep in mind that a M student could, theoretically anyway, buy a student section ticket and show up wearing an IU shirt. Now, I am pretty sure the IU fan in this example was not a M student. But you need to have the same rule for everybody.