In a club type atmosphere the competition breeds real players.
I don`t think it is necessarily the competition, but how we Europeans connect sports and club life.
A year ago one of my buddies started to offer free kids coaching once a week and meanwhile we are three "coaches" and 17 kids between 6 and 14 years. We are by no means professional or licensed coaches, just normal amateurs who try to make the kids have a good time. We do Christmas and Halloween partys with them, and most of the time we have more Lego, Barbies and plastic bottles than balls on the pool table.
But most importantly it is no smoking, no drinking, no strange people, just a place where their parents know, that their children are in good hands for an afternoon.
For the three best kids we have another member, who actually has a coaching degree and he does the whole technical stuff, stroke drills etc. and he also gets in the car and drives them to a league match or a tournament, for example if their parents have to work that day.
And for our best young player, we now try to get Jasmin Ouschan into the boat, so he maybe can get access to her academy, where he would yet get another level of support.
So yes, sooner or later a young talent has to face the competition to get match hardened and fight his way up to the top.
But first you have to get your "raw material" you can filter for these talents an that is where clubs are very useful.
And even if you never find such a gem and have 50 untalented kids, who probably never even play in a competition, it is still better they come to the pool club than having 50 Playstastion-Zombies sitting at home.