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New-ish project

In the eastern states I believe it is almost universally the case that schools participate in inter-school sports competitions.
For us interschool sports were more of a showcase thing with one or two events a year but there was no regular competition.
 
The Portuguese system works a lot like what @Outdated described.

Small local sports clubs, some larger ones, but all independent from schools.

Kids are given a chance to try several sportive activities in school, as part of the PE subject classes. Most schools will have some sports teams, and those can even compete in Inter-school championships, but no one gets sports scholarships.

Although, some large clubs may decide to sponsor a kid through school and Uni, particularly if they think that that kid shows talent for sports.
 

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