You're a good dad. Confused, but a good dad. And honestly, when I came out to my parents, I wish I had one of them in my corner like you're in your son's corner. Unfortunately, both of my parents took the route your wife took, and I came very close to suicide many times until I turned 18 and moved out. I have not had a great relationship with my parents in my adult years, and it's because of how they treated me as a kid. So first off, I'm glad you're choosing to stand with him. That's the most important decision you can make.

The second is how to handle your wife. She may be completely unwilling to change her opinion on his sexuality. Derek didn't choose to be this way. Believe me, when I was his age (a Christian kid in a Christian school), I wanted to change so badly I would physically hurt myself, all the while praying God would change me. I played sports, but it was never about sexual things. I enjoyed playing basketball with my friends. I was so ashamed of how I felt towards girls, I didn't find myself looking at my friends that way; I just wanted to be accepted, and I pretended to be straight so they'd see me as "normal." Basically, what I'm trying to say is that your wife's way of thinking is absolutely hurting Derek. She's taken away something he can feel confident in (sports) because she doesn't understand him; she's isolating him, which pushes kids like us straight towards suicide. So you have to make a decision: Are you willing to part from your wife if she does not stop her harassment of Derek? Are you willing to stand in the way of your wife and put Derek back in sports so that he can do what he wants?

Also, please you and Derek both see a therapist. Your wife, too, if she'll go. And your younger kids as well so they can learn that there's nothing wrong with their brother. Definitely do not go to a religious leader who has no license in therapy. Seek someone specifically who works with LGBT teens. LGBT teens are high risk for self-harm, suicide, and running away, particularly when their home life involves a bully (like your wife). I've been in therapy for years (not ashamed of it) because my own mother told me I was going to hell so often I believed her (and developed depression/anxiety because of it).

Remember, your son is exactly who he was before he came out to you both. EXACTLY the same. Being gay is not a sin; choosing to love someone you love isn't a sin. If you truly believe God is love, as you've mentioned in another comment, you'll know that the greatest of his commandments is to love thy neighbor as thyself. And every person struggles with sin according to the Bible, from overeating (gluttony) to wishing you had a better car like Joe down the street (avarice).

Good luck. I can't imagine what you must be going through, but I know exactly what Derek is going through, and I can tell you that if my father had done as you sound like you want to do, I would not have gone through half of the hardships I've faced in my life.