There is a great article on kids and the benefits of youth sports on OfSpirit.com. Here's an excerpt:
Kids usually get the benefits they seek from sports and more. Kids need attention and respect (in that order), but they have few ways to get them. What is unique about sports is that they offer kids an arena where they can earn attention and respect by exerting their natural abilities. Kids are good at sports because sports are essentially about speed, strength, coordination, vision, creativity, and responsiveness—the necessary physical attributes are the attributes of youth.
Given that athletics involves all aspects of the human being, it is not surprising that participants benefit in all of the areas they mention. According to researchers at the Institute for the Study of Youth Sports at Michigan State University, kids who participate in organized sports do better in school, have better interpersonal skills, are more team oriented, and are generally healthier.
Participation in sports provides opportunities for leadership and socialization, as well as the development of skills for handling success and failure.
Moreover, when playing games, children learn how rules work. They see how groups need rules to keep order, that the individual must accept the rules for the good of the group, that rules entail a consideration of the rights of others. They also learn about competition, but within a restricted and safe system where the consequences of losing are minimized.