Varsity Women's Hockey at Michigan

I don't think that is how I would look at it as not every sport is created equal with some requiring more financial support than others. MIT is Division III, and the Ivy League schools spend nowhere near the money that Michigan and other Big Ten schools spend on athletics.

OSU has Women's Hockey. Michigan has Women's Water Polo. OSU does support fencing and Men's Volleyball, but it, like Michigan, is an outlier for the amount of sports they support. Look at the cuts that some of the Pac-12 schools made or considered in the last couple years. Stanford is one of the most successful athletic departments, and they were about to cut several sports before reversing course. Cal was about to cut Men's Baseball before donors (including Stanford) pitched in to save the program.

And eventually when revenue sports start paying their players, the squeeze on non-revenue sports will be greater and need to depend more on donors and university funding than before so I am not sure adding sports right now is the way to go. Women's Ice Hockey would probably need a donor to support to the program to go varsity similar to how Pegula did with Men's and Women's Hockey at PSU.

Chicken or the egg? Women's hockey would probably not be able to function as a Big Ten sport without at least 6 members. It's unlikely that a school without Men's Hockey would offer Women's Hockey which would leave Michigan and/or MSU as the only options. I don't think it could function as a Big Ten sport without Michigan adding a Women's Hockey program first.

Really? Never heard that. I wonder why? Did he think it would take resources away from the men's program? That's sad nonetheless...

Men's volleyball is behind the club rugby teams https://www.michiganunrivaled.com/

So what do we need, facilities wise, for women's team? Are we just talking about a locker room (as far as I'm concerned, visiting women's teams can just use the same visitor locker room as the visiting men, maybe with a little retrofitting)? Is ice time for practice an issue (i.e. need another rink?)? Relatedly, how does Crisler handle this for the men's and women's teams? Do they each have their own dedicated locker room, or do they share, for instance? And I guess, also, how does the club team do it now. Do they play at Yost, or elsewhere?

New facility wouldn’t be necessary, a relatively cheap option exists but it would take away some side revenue for the arena. 
 

The mens locker room is up the stairs behind the home net. At the bottom of those stairs, there are four small dressing rooms. On their own they are far too small to comfortably hold an adult team and you’d struggle to fit most youth teams inside them as well. In their current use, referees get use of one room, a second room is for media interviews, and the third and fourth are used for the youth teams that sometimes play during intermission. Visiting college teams get dressed in a makeshift dressing room at the far end of the arena (may have been updated since I’ve been back there last)
 

Now, it is certainly feasible for them to knock a wall out between two of those dressing rooms and create a single large dressing room from that space for a Women’s Team locker room. The issue this leaves is only two remaining small dressing rooms for the arena.
 

This becomes an issue because Yost allows youth teams and local beer leagues to rent the ice for games. Only having two of those rooms creates a gap between possible usage of the ice (as two teams obviously can’t utilize the rooms at the same time) and effectively cutting that additional revenue in half. Granted, I have no idea how much additional revenue that brings in or if it matters. How big of an issue it is, I can’t say. But it is one of the drawbacks of this theoretical plan. 
 

The biggest actual issue in my mind, is the ROI on a move like this. Women’s hockey would certainly be another program that doesn’t generate money for the athletic department. With the University already in compliance with Title IX requirements, there is likely little interest in adding a sport that doesn’t make money at this time, let alone two. As with most business ventures, there isn’t much of a rush to add areas that cost extra money. 
 

Likely, it would require support from the men’s team (which reportedly didn’t exist under Red or Mel) and a donor willing to foot a portion of the bill for a few years. The University could afford it financially, but there needs to be some sort of return on that investment for them to really take that step.  
 

Two hockey facilities would make it simpler for scheduling practice and games, but I don't think it is a non-starter. Numerous schools with both Men's and Women's ice hockey have one rink and manage well - though I'm sure coaches and athletic administrators put in extra hours working out practice schedules.

Many top hockey schools with both teams are smaller schools without the big TV revenue: Clarkson, Colgate, Union, Quinnipiac, Brown, etc... and they share the ice. 

Perhaps we've reached a tipping point where there's enough girls playing high school hockey that women's hockey on the collegiate level can be considered a growth sport.

My understanding, and this is now 15 years old so take it for what it's worth, but the difference is that the IM teams work around the hockey team, but that the hockey team has clear first come, first serve basis for the use of all of Yost's facilities. You could not have that preference anymore with a varsity women's team because of title ix. Even if you treated as 1a and 1b (which would be dubious, legally), the scheduling of women's games could potentially get in the way. Red, and presumably Mel, wanted complete control of the facilities and to not give up any logistical control of how it could be scheduled.