The challenges of a ‘no-cut policy’ in athletics

Big school (1,750 kids), big tax base (nicer area of the city), big budget. Our local high school in the Northeast basically has a no-cut policy, but it’s because we don’t have an overwhelming amount of students who try out. That carries its own set of challenges.
I wonder if Kennedy loses its highest caliber athletes to private schools or club teams (who forego high school sports) because of the no-cut policy. Our smaller district loses some high caliber athletes (and other students) because of the limited resources / competition. We are also very close to many excellent alternatives.