@sozobe,
I second guessed myself every year about my decision to not hold K back. She was youngish for her grade (late June b'day with a Sept 1 cutoff), socially immature and highly anxious. She had the smarts but I was concerned about her ability to keep up. I talked to her preschool teacher who suggested we not keep her back because she would have been "bored to tears" with another year of preschool.
We went with the recommendation and she started Kindergarten with the rest of her peers. And she struggled to keep up as we thought she might. She never really caught up and always "hated school" other than the time she spent in orchestra or art classes. As I said, I second guessed myself year after year as to whether we'd made the right decision but, from her perspective, it only would have delayed getting out of school by a year.
She was lucky in a way because she managed to get a good education by osmosis due to the quality of the schools she was in. She continued to struggle her first year of college and, in retrospect, she might have done well with a gap year. She transferred to a arts-based college after her freshman year and is now an A/B student in an interior design program. She'll earn her BFA next year and is looking to become a furniture designer before going on for a masters in restoration.
So --- to get back to the original question of holding someone back for sports. Yes, I've heard about it being done for that reason and I've heard it being done for development reasons. It's a decision we struggled with and ultimately chose not to pursue. In her own way, she held herself back by not succeeding as a college freshman. I wish we'd considered giving her a gap year - it would have been a whole lot less expensive than a year's college expenses - but even there, she learned a lot about being on her own. Skills that she's transferred nicely into her new education plan.