I thought this was explained during some part of the game, like when you first go up a level? I seem to recall seeing that info and going "ok, so my 5 star goalie will drop to a 4 star, but keeps their stats". I just use the stars as an indicator for my own team matching up against my opponent. Otherwise, for me, it's all about the stats.

I guess, it should be stated that if you're looking at purchasing a Scouted player (6 star players), you might want to consider holding off depending on when during the season you're looking at doing so. For me personally, I will pass on buying a Scouted player if I've reached the halfway point of the season, unless I truly need that guy NOW! Otherwise, I'll buy only if I've still got more than half my season remaining.