Grades are significant.
Coaches look at grades for two reasons.
First, the student has to demonstrate that they can keep up their grades while playing sports. If a student cannot maintain a decent GPA in high school, this shows the coach that the student lacks the ability to balance their studies and athletics. Some colleges may also suspend a student or put them on probation for poor grades. A coach will not waste time and scholarship money on a student they are not sure will be able to play.
Second, often the school will offer additional academic money to the student which lessens the financial burden on the coach's budget. A student with consistently good grades has a stronger chance of being recruited and keeping their position on the team.