While money is the limiting factor in the pro games, scholarships limit the college games. The total number of scholarships your team can give out depends on the sport: 13 in College Basket, 50 in College Coach, and 25 in College Manager and College Hockey.
Players can be given a scholarship for two reasons. The first is as an added recruiting incentive; a player offered a scholarship by one school but not be another will always take the scholarship. The second is if a player earns it; returning starters will transfer out if not awarded scholarships.
Cuts in college are quite simple. If you don't want a non-scholarship player, you can cut him. You get to do this at the start of the offseason, when there are no limits to the cuts you make. You can also make up cuts at the end of the offseason, though you must retain sufficient players at each position.
This is actually not something you have any control over. Immediately before the recruiting season, you will receive a number of new players picked from a randomly generated pool of players so that you will have a legal roster that can play games at that time. After fixing the roster, the computer will add more players to fill the team, this time picking the best remaining players at any position. The maximum number of walk-ons is 23 in baseball and hockey, 40 in football, and 10 in basketball. After walk-ons, you will get a chance to move and cut players. You can only cut players beyond the minimum position limits.
This is the primary place you will be bringing good players to your school. You may get lucky once in a while with walk-ons, but you will also find a number of very bad players walking on.
The "currency" for recruitment is a recruiting point. Points are spent in attempts to get players to come to your school. If the player comes, you lose all points used recruiting him. If the player does not, you regain about 5/6 of the points. It is possible to use "illegal" points during recruitment, which is the equivalent of cheating. If you are caught, you will be ineligible for postseason action and have half the number of points the following year. Assuming no sanctions, the number of points your team has will depend on your reputation as a coach and the strength of the school's program.
Recruitment is broken into recruiting rounds, which continue until every team has 65 players in football, 35 in baseball and hockey, or 18 basketball. Note that if your team has that many players before recruiting, you will not get a chance to recruit. Teams are usually filled to the limit by walk-ons, meaning that you generally get to recruit one player for every player that is cut after walk-ons.
The first phase of a recruiting round is invitations, in which each school may invite a list of players for on-campus visits. A player in your region (** in the player list) is free to invite; any other player (* means the player has no preference; nothing means he prefers a different region) costs a point. You may also give the player an additional point to increase the odds of his coming for a visit. The number of players to invite is 65 in football, 35 in baseball and hockey, and 18 in basketball. A player's decision here is based on your team's performance the last few seasons, the extra recruiting point, and regional preferences. All recruiting points spent here are lost.
The second phase is when teams attempt to sign the players that decided to visit. If a player is visiting your school, you may "bid" any number of recruiting points to recruit him. If he comes, you will lose all points bid. If not, you lose 1/6 of the points. A player's decision depends on many factors, including the number of points you spent, the player's region preferences, and any leaning the player previously had toward each school. (You can see what schools a player is visiting and his leaning toward each by pressing "H" when he is highlighted.)
Immediately following recruiting, you will be given the option to change the positions of any of your players. These changes are without penalty, as opposed to changes made later. You will then have the option to make cuts, although this is usually unnecessary. Following the cuts, training camps will be run. Training camps generate sample stats for the players, and frequently improve their skills in one or more areas.
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