Why Did the Olympics Go Forward? An Examination of the Host City Contract

As of July 2021, COVID-19 remains a severe public health risk. Given the possibility of so many people with diverse contacts converging in the same place, large sporting events are of particular concern. The 2020 Olympic Games were delayed to 2021 for this reason. However, public health risks remain. On July 19, 2021, less than 1 week before the opening ceremonies, Reuters reported that around 27.7% of Japan had been fully vaccinated.¹[1]Thomson Reuters Corporation, COVID-19 Tracker: Japan, Reuters (July 25, 2021), https://graphics.reuters.com/world-coronavirus-tracker-and-maps/countries-and-territories/japan/ Also on July 19, 2021, reporting suggested that the entire U.S. gymnastics team was at risk of missing their competitions due to a positive test.²[2]Merrit Kennedy, An Alternate For U.S. Olympic Women’s Gymnastics Tests Positive For Coronavirus, npr (July 19, 2021), https://www.npr.org/2021/07/19/1017803655/an-alternate-for-u-s-olympic-womens-gymnastics-tests-positive-for-coronavirus At the time of the opening ceremonies, 100 of the 613 U.S. athletes competing in the Olympics had refused vaccination.³[3]Corky Siemaszko, About 100 U.S. Athletes in Tokyo Unvaccinated as Covid-Hit Olympics Begin, NBC News (July 23, 2021), https://www.nbcnews.com/news/olympics/about-100-u-s-athletes-tokyo-unvaccinated-olympics-begin-n1274816

In the months leading up to the start of the Olympics, public support in Japan continued to falter. The Japanese public remained firmly against the decision to hold the games, with a combined 62% of eligible voters wanting some form of cancellation or additional delay.⁴[4]Kat Devlin, Tokyo Olympics Reach the Starting Line Even as Most Japanese Say Country Has Handled Pandemic Poorly, Pew Research Center (July 20, 2021), https://www.pewresearch.org/fact-tank/2021/07/20/tokyo-olympics-reach-the-starting-line-even-as-most-japanese-say-country-has-handled-pandemic-poorly/ In June 2021, 10,000 of the roughly 60,000 volunteers for the Olympics in Tokyo had quit due to health concerns.⁵[5]Hisako Ueno, About 10,000 Volunteers for the Tokyo Olympics Have Quit, Organizers Say, New York Times (June 3, 2021), https://www.nytimes.com/2021/06/03/world/asia/japan-tokyo-olympics-volunteers-covid.html#:~:text=About%2010%2C000%20of%20the%2080%2C000,the%20event%20during%20the%20pandemic. Although analysis of the severity of the public health risks and public opinion is best suited for doctors and political scientists, there is at least some support for the idea that the games should have been delayed or cancelled.

Commentators have speculated that the Japanese government nevertheless moved forward with the Olympics because of its contract with the International Olympic Committee (IOC).⁶[6]Stephen Wade, Why are the Olympics Going On Despite Public, Medical Warnings?, Associated Press (June 17, 2021), https://apnews.com/article/business-health-coronavirus-pandemic-olympic-games-2020-tokyo-olympics-dd49a7aaaa6c59defea9670c5b19475c This article will examine each party’s obligations under the contract, and why the contract “forced” Japan to go forward.

What’s In the Contract?

The IOC contract signatories are the Japanese National Olympic Committee (NOC), the IOC, and the host city of Tokyo.⁷[7]International Olympic Committee, Host City Contract for the Games of the XXXII Olympiad in the Year 2020, at 81 (Sept. 7, 2013) This contract governs the relationship between the IOC and the organizers. The contract creates an Olympic Committee Organizing Group (OCOG) that is responsible for actually operating the games, separate from the IOC. The OCOG acts as a sort of subsidiary of the NOC and host city. The IOC contract has a number of provisions relevant to the current issue. These provisions will be reviewed in this section, organized by subject matter.

Organization

The beginning of the contract sets out the compliance responsibilities of the OCOG, host city, and NOC. In the preamble, the IOC is recognized as the “supreme authority.”⁸[8]Id. at 5. However, Tokyo, the Japanese NOC, and the OCOG are responsible for ensuring contractual compliance with other entities, including other cities.⁹[9]Id. at 11. The OCOG, host city, and NOC are responsible for the “planning, organizing, financing, and staging.”¹⁰[10]Id. at 9. The IOC is not involved with the day-to-day operations of the games; rather it “entrusts” those other organizations with the games.¹¹[11]Id.

Financial

Tokyo, the NOC, and the organizing committee enjoy several financial benefits. They can keep a portion of marketing campaign-generated revenue, ticket sales, coin and banknotes programs, stamps programs, net revenues, and 80% of surplus related to the celebration of the games.¹²[12]Id. at 17, 18. The IOC retains the 20% of surplus related to the celebration and its own portion of the listed programs.

Cancellation

The “Host City Contract” gives the IOC the sole right to terminate the contract under certain conditions.¹³[13]Id. at 72. Although it did not terminate the contract, the IOC was able to delay the games from 2020 to this year under its contractual powers. The contract may have been terminated if the host country is in a war, civil unrest, under boycott or embargo, or if the IOC believes there is a threat to participants safety. It also may have been terminated if the host city, NOC, or other organizing committee violated certain clauses. The host city does not have the same powers in deciding whether to terminate.

Given this contract language, Tokyo cannot cancel the Olympics, according to Yoshihisa Hayakawa, a professor of law at Rikkyo University, who also practices with law firm Uryu & Itoga in international commercial arbitration.¹⁴[14]Id. at 13. Further, Tokyo is responsible for losses; the IOC contract has waivers of “…indemnity, damages, or other compensation.”¹⁵[15]Id. at 73. This means the city of Tokyo covers any losses should the city itself cancel the games, as well as any money the IOC owes vendors, advertisers, or anyone else under a vendor contract. The insured cost of the 2020 Olympics is an estimated 2 billion USD.¹⁶[16]Elaine Lies, Factbox: Money, Money, Money: The Cost of Tokyo’s Pandemic-Delayed Olympics, Thomson Reuters Corporation (June 10, 2021), https://www.reuters.com/business/media-telecom/money-money-money-cost-tokyos-pandemic-delayed-olympics-2021-06-10/ Such a significant amount of money appears to be a strong motivator for Japan’s decision to hold the games.

What Does the Contract Mean for the Olympics?

The IOC is the “final authority” for the Olympics.¹⁷[17]David J. Ettinger, Comment, The Legal Status of the International Olympic Committee, 4 Pace Y.B. Int’l L. 97, 98 (1992) Such power allows the IOC to act as a “court of original and appellate jurisdiction” over issues regarding individual athletes.¹⁸[18]Id. at 118. The IOC also has a significant degree of control over NOCs; it is free to suspend or withdraw the NOCs from representation of their respective countries.¹⁹[19]Id. at 117. The contracts between the IOC and host governments can be extremely broad and even trump citizenship rights within host countries.²⁰[20]Angela Gamalski, Article, An Olympic Joke: Sanctioning the Olympic Movement, 27 Mich. St. Int’l. L. Rev. 305, 313 (2019) Clearly, the IOC is afforded a significant amount of power, power that it will not hesitate to use.

NOCs, local governments, and other entities connected to Olympic organizing are essentially at the mercy of the IOC. Dispute resolution for the Olympics is governed by the Olympic charter, so there may not even be a legal basis for a national government to intervene. This type of contract, while seemingly unfair, is standard for host cities in form and content.²¹[21]Jessica Borowick, The Olympic Host City Contract: Achieving Relational and Referential Efficiencies to Deliver the Best Games Ever, 12 Va. Sports & Ent. L.J. 126 (2012) No host city or the IOC has challenged the contract before in arbitration or litigation.²²[22]Id. at 144. There have been previous disputes, but none that discuss the enforceability of the contract terms.²³[23]Id. The IOC has shown willingness to enforce its own intellectual property rights against private parties. In I.O.C. v. San Francisco Arts & Athletics, the IOC brought a suit under the Lanham Act against a San Francisco corporation to prevent the corporation from merely using the word “Olympics” to describe a competition.²⁴[24]I.O.C. v. San Francisco Arts & Athletics, 781 F.2d 733, 738 (9th Cir. 1986) This case serves as an example of the degree to which the IOC is willing to go to protect its interests. In entering the contract, the Japanese government and Tokyo should have been aware of these issues, given the pervasiveness of them.

Conclusion

The games are underway. Tokyo had no clear path for recourse, given the Host City Contract and the power the IOC has over disputes. The IOC did not cancel, likely because of the money it would lose. It also seemingly has the power to hear disputes over the contract, rendering any challenge to the contract’s enforceability unlikely to succeed. The lack of avenues for redress for host cities, even in the face of public opposition and public health concerns, may motivate a renegotiation of how Olympics contracts are negotiated. The Olympic charter itself may have to be renegotiated, given the apparent lack of an effective dispute resolution mechanism.

Written by: Benjamin Kaplan
Ben is a 2022 J.D. Candidate at Brooklyn Law School