Jack Anderson: Why are Olympic Games immune from shutdown?

Jack Anderson: Why are Olympic Games immune from shutdown?
Romania’s Paul-Andrei Aradoaie, right, throws a straight left to the face of Bulgaria’s Blagoy B. Naydenov in their Men’s Light Heavyweight preliminary round bout of the Road to Tokyo European qualifier in London. Picture: Harry Murphy/Sportsfile

In American sports the term shutout is usually associated with a comprehensive victory over an opposition that has failed to score.

Last week, the spread of the coronavirus was such that it almost secured a shutout of sporting events globally.

Almost.

As many parts of the world move to self-isolated, one major sports organisation, the International Olympic Committee (IOC), remains isolated in its resolve to hold what will be the world’s most significant sporting event of 2020, the Tokyo Games.

Even President Trump, whose response to the coronavirus has been criticised as ranging from the disdainful to the dilatory, has since asked for the Games to be postponed.

Mixed messages have emerged from Japan: the prime minister Shinzo Abe finally clarifying at the weekend that his government’s position remained that the Olympics would go ahead as planned.

Cancelling the Tokyo Games would, it has been estimated, reduce Japan’s annual GDP growth by 1.4 per cent.

In contrast, the IOC has been resolute in stating that the Games will go ahead on the scheduled start date of July 24.

At first instance, the response of the IOC appears understandable, there is time yet: 16 weeks before the opening ceremony of the Tokyo Games.

But that appearance of time is a chimera and for three reasons.

The first is because for thousands of athletes across various sports, the Games have, in effect, already begun.

The 16 weeks between now and the end of July were set to be full of qualifying events for the Games, now postponed.

While some sports plan to limp on with a limited schedule of events but without spectators in attendance, the issue for the Olympics is more elemental still — it may simply not have enough athletes in qualified to attend.

Second, even in the last week the preventative measures taken by various governments worldwide against the coronavirus have moved to a more intense phase; a phase that might ironically but neatly be encapsulated in the Olympic motto of Citius, Altius, Fortius (higher, faster, stronger).

Take Melbourne in Australia as an example. On March 8, the focus of that sporting mad city was to fill to the MCG in order to try and break the record attendance for a women’s sporting event — over 86,000 turned up.

Within a week, the opening event of the Formula 1 season in Melbourne’s Albert Park, set to be attended by over 100,000 on race day, was cancelled.

Third, the wider public, even those most sympathetic to sport, are, as the health and socio-economic impact of the coronavirus deepens, likely to see any sports body that appears at odds with the consensus on postponing mass attendance events, as irresponsible and driven by values that are selfishly commercial in nature.

This point was made last week by leading Formula 1 driver Lewis Hamilton who, exasperated by the dithering over the Australian Grand Prix, noted pithily that in modern sport “cash is king”.

IF, for public health reasons, the IOC does decide to postpone the Games, it will, similar to other major sporting bodies, have to take into account a range of practical and commercial consequences and including the impact on the athletes, ticketing, sponsorship and broadcasting obligations, insurance and the wider issue of brand reputation.

Before discussing these issues individually, it must be remembered that the IOC is not just any other major sporting body. The IOC demands significant public funding from the host county in staging a Games - the estimated total cost of the Tokyo Games is US$12.6 billion. The host city contract between the IOC and Tokyo is equally demanding.

The International Olympic Committee has faced called to postpone the 2020 Games
The International Olympic Committee has faced called to postpone the 2020 Games

Of note here is clause 71 of the original host city contract between the IOC and Tokyo signed in 2013. The clause says that should any provision of the contract provide undue hardship for the organising committee of a kind which could not have been foreseen at the time the contract was signed, the organising committee can request the IOC to consider “such changes as may be reasonable in the circumstances” but provided that such changes “shall not adversely effect the Games or the IOC.”

Moreover, the clause goes on to state that any changes are at the ultimate discretion of the IOC and that they are “not obligated to consider, agree or otherwise accommodate such changes.”

In short, the decision as to whether to call off the Games or reschedule is ultimately one for the IOC and, as other clauses in the host city contract make clear, any arising liabilities lie with the host city’s organising committee.

Normally, where a sports body has to call off an event, it has to implement cost-cutting in order to offset the loss of gate receipts from spectators and the need to refund those who pre-paid for tickets.

Even in what is generally held to be the sixth richest soccer league in the world, the Championship in England, the financial future of certain clubs has been called into question by coronavirus’s impact on club cashflow.

A way of cutting costs in professional sport is to reduce player salaries.

The contractual basis for this is so called adverse changes clauses (force majeure).

These clauses contemplate sudden, unexpected, unavoidable loss which frustrate the completion of the contract and may justify salary reduction; for example, broadcaster or key sponsor insolvency or natural disasters including so-called Acts of God. The coronavirus as a pandemic would likely come under the latter.

The IOC however does not have this particular problem. It does not pay the athletes.

Where matters get tricky for the IOC is with regard to its sponsors and broadcasting partners. The IOC’s total revenue during the most recent Olympic cycle i.e., the Sochi 2014 and Rio 2016 Games, was US$5.7bn of which US$4.15 was from broadcasting (73%) and 18% from sponsorship.

If the sponsors and especially the TV broadcasters do not get what they have paid for — American broadcaster NBC Sports has already announced an Olympic record sale of more than US$1.25 billion of national advertising space for Tokyo 2020 — the pressure on the IOC to compensate them will be significant. The extent of the IOC’s legal and commercial exposure will depend on the interpretation or presence of force majeure clauses in the various contracts.

Moreover, insurance against such unexpected risk, primarily an obligation of the organising committee in the host city contract but also topped up by the IOC’s estimated US$20 million-dollar policy, is likely to come into play.

The Tokyo Games will take place across 42 venues. It will hold 339 events in 33 different sports, covering 50 disciplines and all this means that it’s unlikely to be moved elsewhere. Postponing the event to later in the year would place many athletes in their off season and be a scheduling nightmare for broadcasters. This means that postponement for a year or two at the same time of year is the most likely eventuality.

One final point of consideration for the IOC is that of brand recognition.

The IOC is wealthy, but it only has one asset –— the Games and they operate on a four-year cycle.

Already concerned about the ageing demography who watch its Games, the IOC has sought recently to include new sports — sport climbing, skateboarding along with surfing will feature in Tokyo.

The IOC has even flirted with esports though what Olympic values can be reconciled with competitive computer games which entail sitting at a screen all day in order to shoot or otherwise kill virtual opponents by any means necessary, is not clear.

The IOC is, in short, determined that in a crowed sporting calendar, its Games remain relevant.

The answer to the question, if the Olympics were not held this year would it be missed — is not as straightforwardly affirmative as it was in the past.

The butterfly effect of what happened in a market in Wuhan in December remains a grave public health matter for masses of the earth’s population, but may yet have grave commercial consequences for the world’s largest and oldest mass sporting event.

Jack Anderson is Professor of Sports Law at the University of Melbourne.

    Useful information
  • The HSE have developed an information pack on how to protect yourself and others from coronavirus. Read it here
  • Anyone with symptoms of coronavirus who has been in close contact with a confirmed case in the last 14 days should isolate themselves from other people - this means going into a different, well-ventilated room alone, with a phone; phone their GP, or emergency department - if this is not possible, phone 112 or 999 and in a medical emergency (if you have severe symptoms) phone 112 or 999

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