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Clearly there would have to be exceptions for guys who legitimately transfer, and even guys who flunk out or get kicked out of school because you never want there to be an incentive to keep people who are dangerous or simply can't cut it, but it is absolutely workable.
As far as the question of whether athletes should get " preferential treatment" in terms of meeting certain standards, I don't have a problem with it up to a point. But I do think it is important that the admissions people have input into the process.
I would be very leery of rules for transfers and academic failures. You need to be sure you do not open a back door that allows coaches to force kids they recruited to transfer or flunk out. You need to make the coach stand by his recruiting decisions. If he takes an academic risk or moral risk and they fail he needs to suffer for his decision. Maybe you allow 90 scholarships instead of 85 to leave a little room for error.
As I said earlier schools have to admit kids who they are confident can succeed academically. If you cannot you should not be at the school. These are Student-Athletes, not Athletes who might be students as well.