Cancelling the Olympics? Huge consequences and a financial quagmire

There is rising opposition in Japan to hosting the Olympics

Cancelling the Tokyo Olympics would be unprecedented in peacetime

Cancelling the Tokyo Olympics in response to mounting public opposition in Japan to holding the Games during the Covid-19 pandemic would be an unparalleled act in peacetime.

It would represent a bombshell for the sporting world and have far-reaching and complex financial consequences.

- Who would take the decision to cancel? -

The IOC, however, has no intention of cancelling, convinced that a safe and secure Olympics can be held for the 11,000 expected athletes in the Japanese capital.

"The closer we get to the Games, the less control the IOC has: it wants to maintain the fiction that the IOC is the boss, but it will not impose the Games on the Japanese authorities," says Jean-Loup Chappelet, emeritus professor at the University of Lausanne whose research is focused on the governance of international sport organisations and events.

- What are the consequences for Japan? -

A cancellation would reduce operating costs linked to the Games themselves: catering, transport, energy and the  rehabilitation of the Olympic Village before it is turned into apartments. But it would also, above all, slash revenues.

Organisers would also be stuck with an enormous bill: a partial reimbursement for local sponsors to the tune of $3.3 billion, while they would probably have to pay back the IOC's contribution of $1.3 billion.

The IOC has never divulged what revenues it expects from the Tokyo Games, the reason being the body only publishes its revenues on a four-year cycle. Revenues in the 2013-16 cycle covering the Sochi Winter Games and the 2016 Rio Summer Games touched $5.7 billion.

The remaining revenues comes from international sponsors and a cancellation would involve detailed negotiations with each partner on how much they could recoup.

Also in danger would be the entire sports movement since the IOC finances both National Olympic Committees and international federations -- and they are already under the financial cosh because of the coronavirus pandemic.

This remains the principal mystery: since the 2006 Winter Games in Turin, the IOC has been insured against the risk of cancellation, "but it is not known whether the policy remained at the original amount, around $900m, or was lowered" as the Lausanne-based body's reserves swelled, according to Patrick Vajda, head of XAW Sports which specialises in risk management and insurance solutions for sports events.

Vajda told AFP that some broadcasters such as NBC in the United States are insured, for amounts not publicly revealed, and some international federations have also been able "to sign up to the IOC's cancellation policy".

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