The Olympic games are simply not important.
Whilst I agree that identifying the person who can run fastest or throw further or whatever on a specified day is totally unimportant, the reality is that billions of dollars depend on it happening. Sky has spent hundreds of millions, maybe even billions, of dollars on buying the rights. People are already talking about ditching Sky with no Super or SANZAR rugby; no Olympics could be the death of Sky. (Not that I personally care very much about the survival or otherwise of the Sky dinosaur, just saying that for some people it's really important). Tokyo and Japan have also spent billions on setting up for the Games. So from this point of view the Olympic Games are *very* important to many people.
I can imagine that enforcing quarantine periods for all athletes, officials, and TV crews would mean that they could compete without passing on covid19. (Presumably equestrians have already been doing this with their mounts?) After the quarantine period, all infected athletes would no longer be contagious, and could safely interact with uninfected athletes. I doubt that you could do it for spectators though.