Word I've received from a very credible source is that the administration disagreed with Silvey wanted to pull the scholarship of an athlete who was nothing but a cancer for the team.
However, the "smarter visionaries" in Martin Hall felt it was more important to keep wasting the scholarship on a punk athlete so their APR rating wouldn't take a hit. Silvey had already pulled scholarships from other slackers upon arriving, and I guess the university didn't care much for his discipline style.