What is the ruling regarding people who wear shorts when they play sports and people who watch them play?
Playing sports is allowed when it does not prevent one from what is obligatory. If it were to prevent one from something that is obligatory then it would be unlawful. If it becomes something that people spend most of their time in, then it would become a waste of time, in which case the least of what could be said is that it is Makrooh (disliked).
As for a person playing a sport, who is wearing only shorts that expose his thigh, or even more then that, then this is not allowed. For what is correct is that it is obligatory for young men to cover their thighs, and that watching a sport whose participants have their thighs exposed like this is not allowed.
Shaykh Muhammad ibn Saalih al-'Uthaymeen
Fatawa Islamiyah Vol 8, Page 256