Billion dollar figures! Understand the impact of postponing the Tokyo Games

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Some of the main sponsors of the International Olympic Committee (IOC) began to signal their intention to maintain support for the Tokyo 2020 Olympic and Paralympic Games, after the postponement to 2021, still without a certain date. The news is a relief to the organizers, who hope they do not have to return the millions already collected, but it is far from giving tranquility to a project that will suffer an inevitable jump in its expenses.

Even though the numbers are not accurate, the postponement of competitions due to the pandemic of the new coronavirus may require an additional expenditure of US $ 2.7 billion (about R $ 13.5 billion), according to the Japanese economy newspaper “Nikkei “. This was at a time of severe global economic crisis, intensified by the spread of the disease.

– It is not possible to accurately evaluate the numbers, as we do not know the terms of the agreements signed between the IOC and the Organizing Committee with their respective sponsors, which contracts will be broken and which will be maintained, what percentage of the public will request eventual reimbursement of tickets, if it is effectively authorized, and will stop bringing revenue to tourism. But we can say that this edition of the Games will undoubtedly be jeopardized, even if the contracted insurance policy is obtained, and that a joint effort between organizers, federations and the host country is needed to mitigate them – believes the lawyer Josiel Vaciski Barbosa, partner founder of Suttile & Vaciski Advogados Associados.

The Games account was no longer modest before the unexpected. Although the official figures, released in December, speak for US $ 12.6 billion (about R $ 63 billion), an audit by the Japanese government estimates that the final expenditure will reach US $ 26 billion (about R $ 130 billion) . It is already the most expensive edition in history. The Rio Games, for example, officially cost R $ 39.07 billion.

Alongside Japan’s actions, such as construction and renovation of arenas, the IOC has its fundraising goals with the visibility of the Games, and a group of companies takes on a prominent role. Among all the supporters, 14 brands are classified as “top Olympic sponsors”, who signed contracts that total numbers in excess of US $ 4 billion (about R $ 20 million). The Tokyo-2020 Organizing Committee, in turn, signed approximately US $ 3 billion (about R $ 15 billion) in agreements for its operations.

According to the Reuters agency, Procter & Gamble, Intel, Airbnb, Coca-Cola and Samgung should not charge the return of the amounts disbursed to the IOC. A spokesman for Coca-Cola, the longest-serving supporter of the event, said the brand is willing to work alongside the organization and the Organizing Committee to create a safe and successful event. Samsung said it will maintain “close contact with the entities to ensure a” safe and memorable “Olympics. Bridgestone did not declare maintenance of the aid, but said it would” seek creative solutions “in the face of the postponement, without informing which ones. entities have to negotiate various compensations.

Sponsorships, however, are not the largest share of Olympic Games revenue. In the last cycle (2013 to 2016), about 73% of the amount obtained by the IOC came from broadcasting rights contracts, while around 17% came from sponsorships. Revenue in the period was US $ 5.7 billion.

In view of the postponement, it will be necessary to face deadlocks, such as the issue of television network grids, which may clash with the programming of other sports competitions previously scheduled, the calendars of the international federations and the reservation of the expensive sports facilities and Olympic Villages and will need to stay closed for months.

The sale of the 7.8 million tickets available, of which 5 million have already been sold, also worries the organizers. Sales started in June last year on the domestic market, and would continue from May.

– It is estimated that more than US $ 800 million (about R $ 4 billion) were collected from the sale of tickets and, if the Organizing Committee confirms the possibility of reimbursement for the postponement, the leak could be significant – believes Clarissa Massaneiro Viana , also a lawyer at Suttile & Vaciski Advogados Associados.

Postponing was less costly solution

Although I cannot say how long the coronavirus will affect the world population, the IOC and the Tokyo-2020 Committee know that the choice to postpone it to next year was the least costly. The conservatism of the leaders was left aside, after all, according to the Olympic Charter, the Games should, by tradition, take place every four years.

– If they were canceled, the contracts already signed would be terminated, even if by chance, or force majeure, causing a greater loss to the IOC and partner companies, including having to return the full value of the tickets to consumers. The postponement, which will also result in losses, has the facility of being able to renegotiate the contract, as there will be the installment, but at another time – explained Rodrigo das Neves Pereira, lawyer at the Cortes e Silva Advogados office.

Since Athens-2004, the IOC has signed contracts with insurance companies to cover losses in certain situations related to contracts for television rights, sponsors and ticket sales, which will mitigate the damage.

– Certainly a cancellation would result in a spill of lawsuits around the world, filed both by sponsors, athletes, insurance companies and the general public. The postponement was undoubtedly the best solution, because it took advantage of the billionaire works made for the Games, attracting tourists, even if perhaps in a lower number than anticipated, and maintaining the IOC and Organizing Committee contracts with sponsors and broadcasters. TV broadcasting rights holders – Clarissa evaluated.







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