This has always seemed like a weird defense of college sports to me, because college swimming, soccer, etc. are still an elite cadre of extremely physically fit young people.
Maintaining physical health is huge, but the demographic that needs to be targeted is lower performance level that club sports. Even THOSE are quite competitive. Even the (very fit) people who participate often cease physical activity and healthy eating soon after graduation.
On the other hand, subsidizing college gym facilities does tend to reach most of the student body. Required athletics classes is even more effective and pays long-term dividends (if they haven't been canceled due to COVID by now). But even more-so than that, consistent physical activity for grade school and high school would be even better from a whole society perspective.
