Isaac, you are right they are the customer but so are their clubmates at their current club. How much do you think it will cost to develop an elite player? Where do you think this money will come from - legally its called "member's funds"
Those are red herrings. Customer pays fees. Customer gets service. If other customers would rather go to another service provider, they can.
The player/parent is that customer and they are seeking the best service for their needs - balancing proximity, price, product, etc. It won't always be the champion club or the nearest club or the cheapest club but all of those factors can be important.
Why should members funds be invested in player development when these players can just move on impacting the players left behind. Think about it shouldn't those members funds that have been invested be compensated or at least some small hurdle be in place so players think twice about the impacts before just leaving.
If a given club doesn't want to "invest" funds in player development because they're scared of them leaving later, they don't have to. Get out of the game if you don't want to play it. I'm sure there'd still be clubs (not suggesting any clubs in particular - doesn't bother me which, I just think all should constantly seek to improve their service) who, instead of worrying about those occasional issues, would carry on.
Why would members agree to employing a Coaching Director when they just end up, in the short term, just spending this money so that the best players go to other district clubs. All they do is develop players for those players to go elsewhere.
You sound like such a defeatist. And the keyphrase here, I bet, is "short term" - look at the bigger picture!
Under the current format would it not (and I dont think this) be a smarter business decision to just invest that junior development money in your senior program and get the players at the other end of the process?
Why even raise this as a point if you "dont think this"?
The smart business decision is to provide and market the best service to customers - not grapple for a regulation to encourage mediocrity. Some customers will leave for minor reasons (personal gripe, friends moving elsewhere, moved else, changing needs, need fresh approach) but that happens in business. I have clients whose needs change or who have incoming staff with a different preference about their provider, etc - so be it.