A lot of thoughts on this topic...
1) If the middle school "state champ" got so good and won state while at one school, why would he need to transfer schools to win state? They have proved they could do it at that school.
2) "coaches that get paid more" does not make them a better coach.
3) I can't imagine how hard it is for athletic directors to find good coaches. And then for those coaches to find good assistants, and a junior high coach, and youth coaches. I feel pretty blessed to have a great coaching staff. But small towns have enough time finding one guy that can do it. The sport, to do it right, is year round. I read an article a few years ago about how most coaches were either divorced or their kids were grown up, because it takes so much time away from their family. Tough balance. I am finding out with a 3 and a 1 year old...
4) As a coach, you better not put all your eggs in one basket. At Edgewood, we have always stressed the team aspect. That's why I fell in love with this sport. I want to run somebody you don't want to mess with out at each weight class. But it's hard for schools on the rise (or small schools) to have depth. 1 lost athlete can mean a lot. Over the past few years, I have lost a kid to Missouri (he took 5th there), a state qualifier to a rival school, and a regional champ dropped out of school. It's important for a coach to stress more than one athlete's importance.
So, I think what honestly hurts the sport (and all youth sports in general), is the year round aspect. We are producing the best wrestlers ever, but I think losing a lot of the "casual" wrestlers, which gives us much more depth in the sport of wrestling. "Hey wanna come try wrestling for the first time and get your face kicked in by this guy who has trained everyday for 5 years? Does that sound fun?"
Parents deserve to do what is best for their child. Transfers are just part of the reason wrestling has issues.