The report Teenage Kicks, commissioned by the Laureus Sport for Good Foundation and produced by think tank New Philanthropy Capital, examined three projects, which use sport to engage young people in a wider programme of education and support.
One project, the Boxing Academy, was found to cost half as much to run as a pupil referral unit and generated lower re-offending rates among young people.
Report author Camilla Nevill said: "Cuts to sport and youth projects are a false economy. Sport combined with targeted support has huge potential to engage hard-to-reach young people, change lives and communities, and provide value for money."
Another project, Kickz, was found to create £7 value for every £1 invested by reducing costs to victims, police, prisons and courts.
The third project, 2nd Chance, uses sport to work with young people in Ashfield Youth Offender Institution. The project helps young offenders build relationships and improve behaviour by giving young people the chance to take sports qualifications and be mentored once released.
Double Olympian decathlon champion Daley Thomson said: "Sport is not just a nice-to-have. It’s a powerful and effective tool for tackling a number of social challenges.
"The government needs to inject funds and bring communities together to make these projects more effective and grow the number available. This report proves the economic case for sport and proves that money can be saved in the long run."
