Postponing the Olympic Games

5 Min Read By: Richard W. Pound

IN BRIEF

  • The COVID-19 pandemic has led to postponement of the 2020 Olympic Games.
  • With the goodwill surrounding the Olympic Games, it should be possible to effectuate the postponement, but a formidable series of challenges looms ahead.
  • What are some of the considerations involved in postponing an event like the Olympic Games?

The Olympic Games: an event that involves athletes from 206 countries competing in 33 different sports, each requiring specialized training and competition facilities, that must be completed in 17 days as half the people on the planet watch the exciting drama unfold. Think of the tens of thousands of contractual and other arrangements that go into the delivery of an event as complex as the Olympic Games.

The Games are awarded to the city selected by a majority of the members of the International Olympic Committee (IOC) from among candidate cities around the world approximately seven years prior to the date of the Games. The organizational aspects are set forth in a contract between the IOC, the host national Olympic committee, and the government of the host country. Tokyo was chosen in 2013 for 2020 Games, and the exact dates were identified shortly thereafter: July 24–August 9.

Once the dates are confirmed, everything turns on ensuring the Games will start and finish on those precise dates. There is no margin for error; everything must work perfectly—the first time. Using military terminology, the Games are a no-fail mission.

Athletes build their training around a fixed schedule: an athlete competing in the 100-meter dash, for example, knows precisely when the heats, quarter-finals, semi-finals, and finals will occur in order to achieve optimal performances during the Games. The international sport schedules in all Olympic sports are designed around the Olympic calendar so that all athletes are at their best for the Games.

Broadcasters, sponsors, spectators, transportation companies, hotels, meeting and other facilities such as conference and convention centers, suppliers, and construction and development organizations all base their planning on the dates of the Games. Legislation in the host country generally needs adjustment to permit entry without visas (merely the Olympic identification card), to permit Olympic parties to bring equipment and workers without taxation and to remove both when the Games finish (again without taxation), to establish the necessary security arrangements, and to provide special access at airports and other border crossings, to name but a few.

The Japanese organizers have been first class, and there was little doubt that the Games were going to be extremely well organized. There was a universal expectation, within the Olympic movement and throughout Japan, that the forthcoming Games would set new standards in Games planning and delivery.

Enter COVID-19.

That the world was unprepared to deal with this virus is now all too apparent. Not only was the world unprepared, but in too many cases the threat was underestimated, and exceptional measures to limit its spread were not undertaken quickly enough. The virus spread and a pandemic resulted. Personal livelihoods and freedoms have been compromised, the economy has suffered, education has been affected, people have died from the virus, and more will die.

Although an event like the Games is not as important as the larger existential threat implicit in COVID-19, it nevertheless is impacted by it and, depending on the organizers’ conduct, could either support efforts to contain the virus or act in disregard of those efforts.

The contractual right to cancel the Games in the face of, among other considerations, safety concerns could have allowed the IOC to unilaterally cancel the Tokyo Games. It did not do so. Instead, it responded positively to a request by the Japanese government to postpone the Games, after consultation with the WHO, competing athletes, international federations, and national Olympic committees. The most convenient postponement was almost exactly one year, to begin on July 23, 2021, taking advantage of vacation periods and student holidays to reduce traffic and strains on the transportation systems. The schedule matches previous athlete training rhythms and minimally impacts sport programming for the major broadcasters. It also gives the organizers the time they need to extend, vary, or renegotiate the many contracts entered into before the disruption resulting from the pandemic.

The organizers and others are now undertaking the many challenges of re-weaving the contractual tapestry for Games in 2021. This will remain a work in progress and will require the exercise of tact and compromise, as well as a general desire to make the postponement work. Organizing a first-bounce recovery is much better for everyone, including for Japan, the athletes, and the spectators, rather than simply to cancel the Games. It is not the fault of the Tokyo organizers, nor the Olympic parties, that the pandemic has struck, and no “blame” can fairly be assigned to any of the contractual parties.

A formidable series of challenges looms ahead. To mention but a few, consider the Olympic Village, generally recognized as the “heart” of any Olympic Games, where the athletes of the world come together. This involves some 20,000 people (athletes, coaches, officials, and medical staff) who all must be accommodated, fed, and transported to and from training and competition venues. Security must be provided in a post-Munich and post-9/11 era, which has changed the former, less formal paradigm. All those arrangements must be put on hold and reinstalled a year later. Organizing committee employees may be kept on, or laid-off and rehired several months later. Venue arrangements need renegotiation, and ticket arrangements may be carried forward if the venues remain exactly the same, or revised if there will be new venues. Hotel accommodations may or may not be carried forward, depending on negotiations with the relevant associations. Airport and border-crossing security must be reconfigured, and coordination with law enforcement agencies and even the military put back into place.

With the goodwill surrounding the Olympic Games, this should all be possible. The world wants the Olympics to work because if the Olympics can work, perhaps someday the world will work. First, however, we must wrestle COVID-19 to the ground.

ABOUT THE AUTHOR

Richard W. Pound

Richard Pound is a counsel in the Tax Group of Stikeman Elliott. His main areas of practice include tax litigation and negotiations with tax authorities on behalf of clients, general tax advisory work…

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