By making it clear to parents/players UP FRONT exactly what your team goals are, coaches can minimize (but not eliminate) a lot of misunderstandings and hard feelings. At 16u, there are two paths teams can take, one of which is the college showcase route. These teams MUST put a priority on recruiting and keeping quality athletes, or else they will not be attending very many showcase tournaments. Being a stud at 12u doesn't guarantee a stud at 16u or above. The flip side is that being a mediocre athlete at 12u doesn't mean they won't be a stud at 16u. There are far too many variables to even mention. If my DD had been on a team at 16u that claimed to be a college exposure team, and then kept slackers over the years under the guise of "loyalty", we'd have been gone in a heartbeat! For the top teams, every season begins new. What ever happened to EARNING your spot instead of just accepting an ENTITLEMENT? Showcase teams have different goals, and keeping players on the roster who do not share those same goals, or are not in the same talent area, only cheats the rest of the team out of opportunities. Cutting a kid you've had for a few years because they're not progressing is certainly tough. But by NOT cutting that kid, you're telling the rest of the team that you're OK with mediocrity. It's NOT necessarily about winning, it's just that the teams with the talented players usually win the bulk of their games.
If your team is not geared towards showcasing players, keeping tenured players at any cost is not such a bad thing. Different goals dictate how you handle your roster from year to year. That's the difference between roster ball and travel ball.