BIHUB PATH

18 August, 2020

HOW THE OLYMPIC GAMES ARE POSTPONED

Social Impact

SIGN UP FOR Current Issues in Sports Governance

join now
318K

Every four years a flame is lit in a different corner of the planet to remind our hearts that there is always hope when guided by the values of sport. It is not an idea that can be put on hold, postponed or cancelled, and it is precisely for this reason that the Olympic Games were designed to be held under any circumstances. But in 2020, Covid-19 has subjected the International Olympic Committee and its headquarters in Tokyo to an unprecedented situation, and one of the greatest challenges for governance in modern sport.

 

Managing Uncertainty

 

No one was quite sure how to handle such unprecedented situation in sports history. At the end of February, coronavirus was seen to be only a local problem in Wuhan, China, Italy, Spain and Japan. Faced with the impossibility of changing venues just five months before the start of the games, the Olympic Committee announced that they were considering cancellation. Japan reacted by expressing their discontent through various means, and warning that the great economic damage this would cause them would not be faced alone. The IOC then offered the opposite solution, to celebrate them but adapting to the pandemic. Therefore, when all the national and international leagues and championships had been postponed or cancelled, the Olympic Games Organisation stated that they would be held on the planned dates, from July 24 to August 9, but without an audience. This solution not only displeased Tokyo, but also the athletes and sponsors. Thus, just ten days after the announcement that they would be held in 2020, it became official that they were postponed until 2021.

 

Decision-Making Power, Negotiations and Lobbying

 

Who made the decision to postpone the Olympic Games? According to the IOC’s FAQs page, it was a cordial agreement between the organisation and the headquarters. Although it was resolved in a friendly manner, it began in a more virulent way and could have ended up in the Superior Court of Sports Arbitration because it started from two opposing positions. The IOC was looking for the maximum benefit for its organisation and the least harm to its athletes, and Japan was hoping not to lose the economic injection and promotion of their country that the games would bring. There were also two other interest groups that did not officially participate in the negotiations but influenced them. These groups were the companies that had been contracted to provide goods and services for the games; as well as the sponsors and television stations, which account for 95% of the Olympic business. The second challenge for governance, besides dealing with a situation which had never been dealt with before, was to coordinate all these interests without ending up in endless litigation or loss of reputation for the IOC – and consequently fewer cities willing to host the Olympics in the future.

 

The IOC started from a dominant position, assuring that the cancellation would not be detrimental to it and that it had nothing to do with financial interests since its proper management and insurance kept them safe from any economic setback. They also had something else: the clauses of the 80-page contract signed with Tokyo in 2013. One of these clauses gave the city the right to cancel the games if the safety of participants was seriously threatened or endangered for whatever reason. Coronavirus meets that requirement because of its great capacity for contagion, especially in large celebrations as those held in stadiums, as warned by the WHO. The Committee was indirectly suggesting that Tokyo adhere to this clause. Japan’s response could not be clearer: they had already invested 11 billion euros, which they would lose, and to which they would have to add the estimated 6 billion euros in consumption revenue. The SMBC Nikko Securities investment firm announced that if the games were cancelled, Japan’s year-on-year GDP would shrink by 1.4%.

 

In response to Japan’s complaints, the IOC turned to the second relevant clause of the contract. This clause specifies that the Olympic Committee can force Tokyo to hold the games without an audience, and although it is a measure designed for acts of terrorism and natural disasters, the pandemic could be included in the latter. The Committee announced that the scheduled dates would remain, but that only the press, the essential staff for the competition to take place, and the athletes would attend the Olympic stadiums and venues. This is how the IOC managed to get not only Japan but also the athletes, sponsors, the city of Tokyo and the Japanese government itself to be against the dates. They were now losing the income from ticketing, from tourism per visitor to the Japanese city, and the attraction of competition with an audience. Many Committee members, both athletes and retired athletes, also disliked forcing the 10 000 athletes to compete with empty stands. The media and sponsors were also dissatisfied, as this option would reduce the audience and advertising revenue.

 

Governance Value

 

We knew about these changes which were being decided for a month, while the negotiations were conducted with maximum discretion and apparent calm on both sides. We learned of the involvement of sponsoring companies or their pressure two days after the postponement was announced, on March 22nd. On March 24th, Discovery Channel, with 13 billion euros contracted in broadcasting rights, communicated its complete support to the measure. Also, Thomas Bach, General Electric and Procter & Gamble assured that they would keep their reservations of spaces and sponsorships, even extending the contracts expired in 2020. They had contributed to a happy ending by predisposing IOC members to reach an agreement with Japan. It could not be otherwise, given that the Olympic Games are considered the world’s biggest publicity event. With nearly 8 million viewers in the venues and 4 billion more on TV and on-line, they boost sports sales globally. Brands such as Nike and Adidas, which account for 76% of the annual investment in sports sponsorship and advertising -9 billion euros- claim that this expenditure generates a huge demand for them, and even more millionaire sales. They are, unofficially, the third key player after the IOC and the host city. No responsible governance would have ignored them.

 

Martín Sacristán

RELATED NOTES

DO YOU WANT TO KNOW MORE?

  • SUBSCRIBE
  • CONTACT
  • APPLY

KEEP UP TO DATE WITH OUR NEWS

Do you have any questions about Barça Universitas?

  • Startup
  • Research Center
  • Corporate

PLEASE COMPLETE THE FIELDS:

PLEASE COMPLETE THE FIELDS:

PLEASE COMPLETE THE FIELDS:

The Form has been sent successfully.

PLEASE COMPLETE THE FIELDS:

PLEASE COMPLETE THE FIELDS:

PLEASE COMPLETE THE FIELDS:

The Form has been sent successfully.

PLEASE COMPLETE THE FIELDS:

PLEASE COMPLETE THE FIELDS:

PLEASE COMPLETE THE FIELDS:

The Form has been sent successfully.