You CAN give a grade for outside performance.
You're demonstrating your TEKS in an appropriate setting. That/those grade(s) CAN NOT be the sole reason a kid fails your class.
Yes, that means that a kid that shows up to zero practices, zero football games, and zero performances, but who gets a 100% on literally everything else, MUST pass somehow with at least a 70.
It's #25 in the FAQ.
Copy and paste, bold for emphasis:
Side by side
25. May a (fine arts director, coach, or academic sponsor) teacher or extracurricular sponsor responsible for posting a student’s grade give points or subtract points from a grade when a student (excels in or) does or does not (fully) participate in an extracurricular activity?
The teacher of a class is responsible for assessing students for promotion based only on “academic achievement or demonstrated proficiency of the subject matter of the course or grade level” (TEC §28.021). The board of trustees of a school district may adopt a policy governing methods of assessment in the district. Unless prohibited by local policy, if a student is enrolled in a class in which participation in extracurricular activities is a reasonable expectation of the class, the teacher may consider the student’s participation in the extracurricular activity when assigning the grade for the grading period during which the extracurricular activity occurred. A student may not be failed in a class solely on participation in the extracurricular activity component of the class.
Remember that in Texas, "co-curricular" basically isn't a thing. It's either curricular or extracurricular, full stop. Anything outside of the scope of the physical classroom is likely classified as extracurricular.