Army vs Navy on CBS

It is unfortunate that you are equating service for one's country into some kind of destructive nationalism - especially considering that, unlike many (possibly most, though I do not have the numbers on hand) other nations in the world, this country does not require compulsory service.  All of it (whether in armed forces, peace corps, or other form) is completely volunteer and knowing the risks/obligations in advance.  The motivations are myriad and complex as well, with very few (if any) doing it out of blind national chauvinism.  Of course, the motivations are not purely selfless and altruistic - national service provides outstanding personal development and career opportunities, yet the adage still rings true today: ask not what your country can do for you, but what you can do for your country.

There is also a parallel to your argument about non-service academy sports.  The conduct of varsity sports in the service academics is the ideal - how all universities should (and did) operate. The error in your rationale is that the student athletes are not benefiting from their participation.  On the contrary, their participation is what enables them to be competitive at the next levels.  The training, preparation and exposure they receive during their college experience gives them the skills and platform necessary to attract the attention of pro employers.  If this was unnecessary, the NFL would have already found a way to draft players direct from high school (as the NHL and NBA effectively do already).  Getting this level of professional development (without needing to pay for, such as people do for IMG academy) in addition to getting a potential world class education for free (their choice if they wish to take advantage of it) is incredible compensation as it is.  Is employment guaranteed afterwards?  No - but nothing in life is guaranteed for anyone, regardless of if and why they went to college.  Simply because there may be some peripheral organization that also benefits from holding/arranging/marketing/broadcasting the sporting events, it does not effect the fundamental transaction between the students and the school.  Also, look to the driving force for most of that revenue - is it really people wanting to pay "top dollar" to see "elite" athletes?  No - this is not the NFL.  Most of the college sports audience are people with some form of affinity to a particular school (alums, family, friends, employees, etc.) who want to see *their* school win, regardless of how attractive the performance is.