Cancel the Tokyo Olympics? It’s unlikely. Here’s why

Tokyo — Are the Tokyo Olympics on, or off? Weighed down by a litany of negative news, unwanted by much of the Japanese public and medical community, the fate of the Games seems murky. Start searching online for “Olympics,” and it often auto-fills with “cancellation.”

But while questions about the major sporting extravaganza’s viability and safety continue to shadow it, veteran observers argue that enormous financial imperatives, the formidable weight of the International Olympic Committee and Japan’s heavy monetary and emotional stake in the Games make it virtually certain it will proceed as planned — barring a major worsening of the coronavirus situation.

Andrew Zimbalist, an economist at Smith College in Massachusetts who specializes in analyzing the business of sports, said the momentum to hold the Games is being driven, first and foremost, by the outsized payoff for the IOC. That starts with worldwide TV contracts and extends to top sponsorship deals.

“There’s some insurance for cancelation,” he told CBS News. “But basically, you’re looking at roughly $5 billion that’s on the line. So that’s the main thing that’s driving this now.”

The prospect of canceling the Olympics, he noted, poses an existential threat to the IOC, since its primary job is to stage the Games every two years.

“That’s what makes the IOC significant,” he told CBS News. “That’s what makes the individuals on the executive council of the IOC significant. That’s what makes (IOC chief) Thomas Bach significant. And so there is a momentum that tells them that this is what they have to do.”

Japan has sunk as much as $35 billion into staging the Games, Zimbalist reckons, making them the most expensive ever — and hard to walk away from.

Or as he put it, it would “be very embarrassing to have spent $30, $35 billion, and then have it all go poof!”

Japanese Prime Minister Suga, however, together with the IOC, has maintained steadfastly that the Games can and will be run without compromising public health. Exactly how they intend to do that will become clear next week with the publication of the final edition of the “playbook,” a detailed manual of safety measures governing athletes, media, possible spectators, and everyone else involved in the Games.

Even if Tokyo did want to back out of the Olympics, legally, it can’t, according to Yoshihisa Hayakawa, an international law specialist and partner with the firm Uryu & Itoga.

“Because the event is organized by IOC, its IOC’s event,” said Hayakawa, who was not involved with negotiations surrounding the Olympics contract but is familiar with its details. “The Tokyo Metropolitan city government is a kind of facility providing service.” 

The host-city contracts have been described as one-sided, offering IOC the benefits of staging the Olympics while saddling host cities with the consequences.

“If things go wrong, it means that they must be financially underwritten by the host,” said Jack Anderson, a specialist in sports law and professor at the University of Melbourne in Australia. “For the privilege of hosting the games, severe contractual obligations come within the host city contract.”

If Tokyo stepped away from the contract it signed in 2013, Hayakawa said, “it is regarded as the default of contract obligation,” potentially exposing Tokyo, and ultimately the Japanese taxpayer, to “gigantic damages.”

But given the potential reputational damage of pursuing an “IOC v Japan” lawsuit in Swiss courts, Zimbalist said it was incredibly unlikely the IOC would bring any legal action if, for instance, a resurgence of COVID-19 infections were to force Japan to walk away.

“What are you doing? Suing the Japanese? They’ve done everything they could. They’ve spent $35 billion. They went ahead with the postponement. They said, ‘That’s okay,’ even though that cost them another $3 billion more, and now you’re going to sue them? So, I think that certainly the IOC would have the legal right to do that, but whether they would do it or not is another question.”

Anderson said there was “no question” that the troubled saga of the Tokyo Olympics would have a lasting impact as cities weigh the already huge logistical, financial and legal burden of hosting future games. 

And the fate of the IOC, too, will affect not only the Lausanne-based organization, but could have wide-ranging repercussions across the world of sports.

“For many sports, for many national Olympic committees and for many international sports federations, their primary source of income is derived from the Olympics (and) distributed by the International Olympic Committee based on hosting games. In the future, if your sole or primary source of revenue is a major sports event, you may have to look at that again… given what we’ve experienced in Tokyo.” 

With even Olympic critics saying it’s already too late to halt the event, Japan is hoping for the best, and bracing for the worst.