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Tokyo Olympics: Japan’s No-Good-Alternatives Dilemma

Published onJul 20, 2021
Tokyo Olympics: Japan’s No-Good-Alternatives Dilemma

After a year-long delay, the 2020—now 2021—Tokyo Olympic Games will begin July 23. However, these Games are incredibly unpopular in Japan, the host nation, and raise public health questions around the world. COVID-19 is still ravaging many parts of the world, and some are concerned about the safety of bringing thousands of athletes together and then sending them back to their home countries.

The insistence to continue the Olympic Games, despite thousands of infections still being reported in Japan, comes from the contractual penalties between the International Olympic Committee (IOC) and the Japanese organizers. Some have also found history to not be on Japan’s side, since the first Olympic Games awarded to Japan were canceled due to World War II. Thankfully, most of the revenue that Japan and the IOC will receive from the 2020 Tokyo Olympics are from television broadcast rights and sponsorship deals. The reliance of the IOC on television rights to generate revenue ensures that even a spectator-less Olympics will be a money-generating experience. Even the contractually mandated branding of the Games remains as “Tokyo 2020”—serving as a cost-saving measure for those who heavily invested in preceding years.

Possible breach of contract claims are at the heart of Japan’s persistence to hold the Games. Even the one-year delay of the Games created financial penalties for Japanese organizers. Notably, NBC had the ability to terminate its contract for broadcast rights when the Games were moved to 2021. While NBC did not elect to exercise that option, it will negotiate with the IOC at the conclusion of the Games for a reduction in its payments due to a Right to Abatement clause in its original broadcasting agreement.

Perhaps the greatest contractual frustration for Japanese organizers is the original contract between the City of Tokyo, the Japanese Olympic Committee, and the IOC. Section 66 of the contract allows only the IOC to cancel the Games if certain conditions are met. Even though the COVID-19 pandemic was not foreseeable at the time of contract formation, Japan is committed to hosting the Games, pandemic or otherwise. No amount of money or time can save Japanese officials from hosting the Games. Even if the Games are wildly unpopular among the Japanese sponsors, they must go on. This quandary is all created by the language in the original contract executed in 2013.

Broadcast deals are not the only lucrative contracts of interest to the organizers of the Tokyo Games as nearly 50 Japanese companies have agreed to pay more than $3 billion in sponsorship. Contributing to the overall contention, many of these domestic sponsors face political and social pressure to renege their support due to the widespread unpopularity the Games have with Japanese consumers. Principally, Japanese citizens are frustrated with the slow rollout of the COVID-19 vaccine, as Japanese health regulations dictate only the elderly and healthcare workers can receive the vaccine and only doctors, nurses, and dentists can administer the vaccine. Also fueling the resentment is the unfortunate circumstance that Japan currently faces its fourth wave of the virus. Asahi Shimbun, a popular Japanese newspaper, and sponsor of the Games, published an editorial in May 2021 imploring Japanese Prime Minister Yoshihide Suga to withdraw as host, citing the public’s “deepening skepticism” about the Games. Overall, because of the contract signed by the Japanese officials to have Tokyo host the 2020 Games in the first place, these controversial Games must go on.

Will the Games’ sponsors, especially Japanese benefactors, receive a return on their investment for sponsoring a domestically unpopular Games? Despite the feelings of discontent from Japanese citizens, the shrewd construction of the host city contract leaves no space for canceling the Games without severe financial penalties suffered by Japan, which have been estimated to total 1.5 trillion yen (approximately $135.6 billion). The 2020 Tokyo Olympics promise to be a Games unlike any other, and while Japan has taken many precautions to mitigate any potential spread of COVID-19, it remains to be seen if the financial penalties will outweigh the public health effects.

Hannah Norem is a rising fourth-year student in the joint JD/MDiv degree program at Wake Forest University. She holds a Bachelor of Arts from Augustana University in Sioux Falls, South Dakota, where she did not play any sports at an Olympic level but had the most entertaining intramural tennis doubles team. Upon graduation, she intends to complete a pastoral internship with her denomination and work in health law.

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