When I was a kid in the 80s, part of the fun of city-league baseball was that lots of kids played, and you were going to see all of those kids at school that you just played with (or against) the night before. I remember when I was 13, one game I got three at-bats, and I just hammered the ball every time.... right to my friend Scott in center field. He didn't even have to move on any of my line-drives, he just reached up and caught all three, and then of course the next day at school, he of course had to give me a hard time about it.
For me, it's hard to say if club teams are the cause of youth sports dying or if they are really more of a symptom of a larger problem in the U.S. that we just don't do stuff together any more, people only hang out with people who are like them, whether that's politically, socio-economically, or athletically.