Most of the sports teams in our area allow kids to play up but not down. The cut off age is different than schools for preschool age kids but after kindergarten they go by grade on most sports. A 2nd grader could play on the 3rd grade team if they want but not the 1st.
Aside from the rec and Compet/select leagues we have Upwards at various churches and those go by grades while the rec and compet/select leagues go by ages. Our soccer association does allow for children with some special needs to play down but otherwise you can choose for the kids to play up. The grade level stuff is where we run into the biggest issue due to the redshirts. It would not be as bad but like a precious poster, we had a couple of kids that had early year birthdays like the one on my youngest's team last year that turned 8 in 1st grade and was huge in comparison. With soccer he would have to play with the kids his own age and have basically the same developmental level as the other kids.
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The only reason parents don't like it is there is no midday bus service so it can be a bit of a pain! Our kids still seem to turn out alright. 
