Cancellation of the Olympiad ... a rare scenario and a decision in the hands of "the Japanese"

The cancellation of the Olympic Games scheduled for Tokyo next summer, a rare scenario in peacetime, due to the health crisis would be an earthquake for the world of sports, with financial consequences that are difficult to assess.

Who will make the decision?

Officially, the host city held signed by the Japanese organizers reserves this responsibility only for the International Olympic Committee, in the event of "war", "civil unrest", or if the safety of the participants is deemed "seriously threatened" for some reason.

However, the International Olympic Committee does not intend to cancel, as it is convinced of its ability to organize "safe" games and bears the hopes of 11,000 qualified athletes.

Conversely, calls are increasing in Japan not to hold the games, where most of the population is against holding the Olympic Games, with vaccination beginning very slowly and national and local elections looming on the horizon.

"The closer we get to the Olympic Games, the less authority the IOC will have: it wants to maintain its president's insistence on holding it, but it will not impose the Games on the Japanese authorities," said Jean-Louis Chablet, professor emeritus at the University of Lausanne and specialist in Olympiad.

The academic added that the decision is completely "political", and therefore depends on the Japanese state and the metropolis of Tokyo, even if all parties agree on a "joint declaration with the International Olympic Committee, as was the matter regarding the postponement that was decided in March 2020."

What are the consequences for Japan?

A large portion of the event's budget has been spent: it was reassessed at the end of 2020 at $ 15.4 billion (€ 13 billion), more than half of this spending consists of public investments in permanent locations, which are supposed to redesign Tokyo's face over time. The cancellation will reduce to margin the operating costs associated with the Games themselves - catering, transportation, energy, and rehabilitating the Olympic Village before it handovers apartments - but above all, it will reduce its revenue.

And Japan had previously lost the 800 million dollars (673 million euros) expected from tickets through its decision to hold the games behind closed doors to foreign audiences and the possibility of the local absence. But it would also have to pay partial compensation to the local sponsors ($ 3.3 billion, or 2.7 billion euros) and possibly forego the IOC contribution ($ 1.3 billion, or 1.1 billion euros).

What will the cancellation cost the Olympic world?

The IOC has never revealed the revenue specifically projected from the Tokyo Games, because it only publishes its revenues in a four-year cycle: those of the 2013-2016 Olympics that include the 2014 Sochi Winter Olympics and the Rio de Janeiro Summer Olympics in 2014. 2016 amounted to 5.7 billion dollars (4.8 billion euros).

Three-quarters of it comes from broadcasting rights that specialists estimate at least $ 1.5 billion (1.23 billion euros) for Tokyo, and should therefore be compensated. The rest will come from the international sponsorship program and will again involve negotiations with each sponsor. The disappearance of these windfall gains will not jeopardize the International Olympic Committee, which maintains only 10% and has reserves of more than $ 1 billion. In turn, it will dry up the entire sporting movement, as it funds the National Olympic Committees and international federations that have already been weakened by the epidemic.

What will the insurance cover?

This is the main conundrum: since the 2006 Turin Olympics, the IOC has been insured against the risk of cancellation, "but it is not known whether its policy has remained at the original amount, which is around $ 900 million (€ 737 million), or has been reduced." In view of the ballooning of reserves of the Olympic Authority, Patrick Vaida, one of the pioneers of sporting events insurance, explained to AFP.

In any case, the compensation will only cover a portion of its losses, and there is no telling that the Japanese regulators will take back anything from their side: they have never confirmed that they are protected against cancellation.

Finally, according to Patrick Vaida, some of the broadcasting channels, including the American "NBC", are insured, at unknown levels, and some international federations "were able to join the cancellation policy of the International Olympic Committee."

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