i think any club with an A & B team will sooner or later cause digruntledness among those pesky parents...true story, look it up.
You are correct! What kid/parent wants to sign up to be on the B or C team compared to the Elite, Premier, or Challenge team? When you're paying $1,000 to play club soccer you want your kids to have the best. Unfortunately only 16-18 per age group are "the best" and that leaves the club to make money off of the "other teams." Ultimately, it's the parents that ruin it as they are the ones that demand their kid get the best, despite their kids often knowing who "the best" players are, especially if they are not one of them.