Sport Wales: Review calls for overhaul of governing body
Sport Wales has been warned it must have a major overhaul and is accused of being "obsolete in its thinking" and "weak in vision" in a report seen by the BBC.
It comes as all activities of the Sport Wales board were suspended.
It claims Sport Wales, which promotes Welsh grassroots and elite sport, "lacks transparency" and risks being broken up unless it agrees to change.
Sport Wales said: "We will continue to work with Welsh Government on this."
The review was commissioned and led by Sport Wales' chairman Paul Thomas, who was appointed in March, in consultation with Welsh Government ministers.
The findings are based on research by an independent firm, which provided the information for the 26-page document.
Sport Wales is in "danger of stagnating", suffers from a managerial "unwillingness to listen" and does not do enough to engage with people outside its Cardiff base, according to the findings.
Issues highlighted as needing to be addressed include communication, leadership, strategy, organisational structure and processes, relationships, governance and funding and collaboration.
The recommendations are to be formed into an action plan to be presented to the Welsh Government, with a view to implement them from January and April 2017 onwards.
"Fundamental change is not an option but a necessity," Thomas wrote in the review.
"The choice facing Sport Wales is very clear.
"Respond to the challenges faced by Wales and its Government and by communities and individuals in a way which acknowledges the views and needs of stakeholders as well as the key national objectives.
"Or, face being broken up into an elite organisation and a health driven body geared to increasing physical activity and wellbeing."
What is Sport Wales?
Sport Wales is the national organisation responsible for developing and promoting sport and active lifestyles.
Working alongside partners such as governing bodies for sport and local authorities, it says its aim is to achieve shared aspirations of getting every child "hooked on sport" for life and Wales being a nation of champions.
Sport Wales is the main adviser on sporting matters to the Welsh Government and is responsible for distributing National Lottery funds to elite and grassroots sport in Wales.
Welsh Government funding for sport is channelled through Sport Wales, which has a number of grants schemes to increase levels of physical activity and sport.
For 2016-17, the Welsh Government has provided Grant in Aid funding of £22.4m to Sport Wales.
Sport Wales has 160 staff members based across four locations in Wales - a head office in Cardiff and regional offices in Carmarthen, Deeside and Caernarfon.
'Elite sport would function without Sport Wales'
An Olympic and Commonwealth Games coach was among those to speak anonymously in the review.
"Elite sport would function without Sport Wales, and we do, as I produce several Olympic and Commonwealth medallists, without any help from Sport Wales," the coach said.
"It is about time that this review has been created, as a nation to roll our sleeves up and make change happen for our communities and citizens and sport in Wales."
Another source speaking anonymously, the chair of a national governing body (NGB), said: "During my time, over 20 years, as a stakeholder in Sport Wales I have been repeatedly surprised by how insular Sport Wales is as an organisation.
"I do not believe the organisation is fit for purpose nor can it recognise the need to change indeed it has become institutionalised by its own insular culture."
Sport Wales has set medal targets for the past Olympics and Commonwealth Games, which were surpassed to produce Wales' most successful multi-games in history.
But writing in the review, Thomas argues medal targets should only be one part of the governing body's objectives.
"In all of this it must be stressed that the winning of medals at major games is not an overriding priority but one that must be balanced against all other competing priorities," he says.
"Sport Wales must satisfy a complex set of political, economic and social objectives.
"Sport Wales must have a culture of openness and transparency. A reliance on the status quo is probably the most significant risk facing this organisation over the next decade.
"The successful work Sport Wales has done in the past has meant sport already plays a significant and varied role in many people's daily lives in Wales and will continue to do so under my leadership. However this is no longer enough."