I use the retaining players option regularly, although very carefully. I always play games with leagues of only one nation loaded, and after 20+ seasons, the teams were full of Englishmen, wherever I was managing. I found it highly unrealistic that the Austrian leagues were full of them.
I fiddled around a bit, and was quite satisfied with retaining players from Slovenia, Croatia, Slovakia, Austria and some other places that are typical origins for Austrian players, and I found that it led to a more balanced game.
I believe though that this option should be used very carefully, and like stated, it's a grey area.
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