The report, entitled 'Grassroots Sport and the European Union', concluded that although "there is value" in dedicated EU funding for sport, "there is greater potential value in mainstreaming it into other EU funding streams, including the structural funds and through ensuring redistribution from professional sport".
"The EU should include sport in its work on digital piracy and should look further at whether the gambling industry should be required to pay a 'fair return' to sport," it argued.
It calls for legislation to be applied to sport in a manner that "ensures the sustainability of grassroots sport, particularly its revenue streams from the broadcasting of professional sport".
'Big thumbs-up' for Commission policy
Yesterday's document comes hot on the heels of a separate report published last month by the House of Lords on the EU financial framework for 2014, which the European Commission described as "a big thumbs-up" for its work on sport, as well as in other areas like lifelong learning, cinema funding under the MEDIA programme and the Erasmus student exchange scheme.
"Coming from arguably the most Eurosceptic EU country, this support is welcomed by Commissioner Vassiliou and will bolster her arguments for strengthening these funds in line with the [Europe] 2020 growth strategy," said Dennis Abbot, spokesperson for EU Sport, Culture and Education Commissioner Androulla Vassiliou.
"This report's a big deal and a big thumbs-up for the Commission's approach," Abbot added.
Nevertheless, there are concerns in EU policy circles over the amount of money that will be made available to fund the new sports programme after sweeping cuts in EU capitals triggered calls for the European Union's budget to be slashed.
"Article 165 gives us a legal basis but it doesn't give us a budget. Unfortunately the treaty came into force at exactly the wrong time and there's no money available at all," Gregory Paulger, director of DG Education and Culture at the European Commission - the department responsible for drafting the new EU sports policy - told a European Parliament hearing in November.
Sport's potential 'under-exploited'
Sport can help deliver major policy objectives in the health, education, employment and social spheres but its potential is being under-exploited at both EU and national level, the report concluded.
The Lords were also critical of the sports industry's representation in EU policymaking circles. "The voice of grassroots as well as professional sport needs to be heard in Brussels. Dialogue between the [European] Commission and sports organisations needs to be made more representative," they said.
Yesterday's publication of the report marks the result of an inquiry into grassroots sport in the European Union launched by the Lords' EU sub-committee on social policies and consumer protection last October.
The Lords had been asked to investigate how the EU's new competence in sport – granted by the Lisbon Treaty's entry into force last December – can be harnessed to "ease existing burdens" on promoting participation and highlight the contribution that grassroots sport can make to society.
The report looked at how the EU can "maximise the potential of sport" in its policymaking, concluding the EU legislation can impact upon sport in key areas like intellectual property and single market law.
The Lords examined the benefits of grassroots sport to individuals and society and considered how participation in sports can be encouraged.
"Sport should not be regarded as a peripheral policy area. We think there is much more value to be gained if sport is viewed as a powerful and effective tool in the delivery of objectives across the policy spectrum," said Baroness Young of Hornsey, who chaired the Lords committee.
Sport must be mainstreamed into all policies because it is "vulnerable to unintended consequences of legislation in other areas," Young added.
Remarking that some member states are more advanced than others on certain sports issues and singling out Finland as an example of high levels of sports participation among older people, the Lords called on the European Commission to create a web portal to encourage exchanges of best practice and allow grassroots organisations to establish links with one another.
The balls now lies in the court of EU member states and members of the European Parliament, who will further develop the proposals set out by the Commission in its January communication and decide which policies to prioritise.