kvetch exaclty my point. If your children are forced to take part, despite lacking any ability - it should be about the taking part and doing your best - not the winning.
merrymouse has it right too
You could run it more like team event - so those with no co-ordination, still get to take part, maybe as a bigger team/House say - Each event, you get points for participating, points for placing, points for how well you do individually etc
So, as an off the cuff example, you might get 1 point for entering the Bean Bag Toss, 1 point for placing 1,2 or 3, one for every metre you throw.
Another event might be hula-hooping, one point for taking part, one point for every second you can hoop so a team member who is taking part, but not very able would help contribute to the overall win.
(Let's say Child A earned 5 points across the two events)
Then every Team Point is put into a final tally and the highest overall score would win sports day. Making it a mini competition, but everyone contributes to the team to the best of their own ability (which is what actually happens in work)
Sure there will be kids comparing how many points each other has, you'll never stop that, but that's not the focus of the event 'officially'
Then you have the actual sports competitions (races, jumps etc) for those who want/can compete,. as separate event almost (even if on the same day) just to find out who is the fastest/highest jumper/best thrower ??