As your body enters into the non-REM deep sleep stage, your pituitary gland releases a shot of growth hormone that stimulates tissue growth and muscle repair.
Muscular recovery is required after intense exercise, particularly strength and endurance training, in which the muscles have been torn down to some degree.
In general, one or two nights of poor or little sleep won't have much impact on performance, but consistently getting inadequate sleep can result in subtle changes in hormone levels, particularly those related to stress, muscle recovery and mood. While no one completely understands the complexities of sleep, some research indicates that sleep deprivation can lead to increased levels of cortisol (a stress hormone), decreased activity of human growth hormone (which is active during tissue repair), and decreased glycogen synthesis.
Other studies link sleep deprivation with decreased aerobic endurance and increased ratings of perceived exertion.
So yes...not getting your sleep probably isn't good for you long term.