Much like our economy, there's a balance between regulatory and market forces. There are sufficient regulatory forces in place (roster freezes, penalizing kids for transferring, etc.) to ensure those that are wary of allowing complete freedom of choice for kids that "mass chaos" will not occur.
Pray tell -- how does Bridge offering slots on its Academy teams after the state championships have occurred in the manner in which they did (i.e., a message board) threaten to erupt into "mass chaos?"
By the way -- as a modest suggestion -- perhaps the way to ensure loyalty to a club or a team is for the club or team to earn it through offering increasingly superior services rather than regulate it and forbid choice.