How would one propose to distinguish* someone who will deliver growth for - say - 25 consecutive years from someone who delivers growth for 5 years yet blows up your endowment in year 6 ?
* beforehand ;)
If you think that "25 years of not blowing up" is a sure-fire way to predict the risk of blowing up in year 26, I would recommend reading Nassim Nicholas Taleb.
Besides, Warren Buffet has a stellar track record much longer than 25 years. People paying him to manage their money has made him very, very rich and those people very happy with him.
I think you kind of summed it up there... There are better things for a university to be doing than paying rainmakers
Dozens of university endowments are over a billion dollars, with significant returns when under good management. Ignoring the returns possible on that means the students and state has to pay more to continue the university. Endowments often consist of hundreds or more fund, usually set up by donors, to advance some part of the university, which very often is scholarships and other direct student benefits.
It's incredibly short-sighted to downplay them without understanding the benefits.
The person running your investments can make or break you. You're going to hire the best you can, and that's going to cost. And someone with a track record of making it rain is going to know this and know what they're worth.
If you want a golden parachute yourself, you're going to need to build a track record of success first showing you're worth it.