[PARTIALLY TRUE] Does the IOC have the sole right to cancel the Olympics? If Japan refuses to host the 2020 Tokyo Olympics, will it have to pay at least 4 trillion yen for breaching the contract?

Screenshot of the Facebook post.

The Claim and Our Verdict

• The claim: Only the International Olympic Committee (IOC) has the sole right to cancel the Olympics. If Japan refuses to host the 2020 Tokyo Olympics, it will have to pay 4 trillion yen for breaching the contract.
• Fact-checking:
  • The “Olympic Host City Contract” (the contract) stipulates that the IOC was entitled to terminate the contract and withdraw the Games from the city. It also has the final say in any disputes related to the contract. Therefore, the statement, “only the IOC can cancel the Olympics” is true.
  • The penalty for breaching the contract, as stipulated in the contract, can be divided into two parts: 1) the retention fund, i.e., 5% of the money payable to the Organising Committee of Olympic Games (OCOG) in relation to the international Olympic marketing programme; 2) 25% of the payment due or granted to the OCOG. According to the fifth version of OCOG and Other Entities Budget for 2021 Olympics, it can be estimated that the penalty could be 200.1 billion yen, not the purported “4 trillion yen” published in the Facebook post. Even if the total budget (1.648 trillion yen) and total expected revenue (716.9 billion yen) are added together, the total would be 2.365 trillion yen, less than the purported “4 trillion yen” penalty. According to official data, the total revenue of the Olympics from 2013-2016 was 552.12 billion yen. Thus, no currently available evidence shows the cancellation fee of 2020 Tokyo Olympics could reach “4 trillion yen.”
• Our ruling: Therefore, we rate the claim as PARTIALLY TRUE.

News Brief

A Facebook post published June 7, 2021, claims only the IOC can cancel the Olympics, and Japan has to pay a cancellation fee of 4 trillion yen if they refuse to host the 2020 Tokyo Olympics. It also alleges that Japan has suggested postponing the Olympics due to the coronavirus pandemic, but the IOC wants Japan to cover all the expenses.

As of the issuance of this report, the post had been shared more than 14,000 times, and had received 979 comments and more than 16,000 “mood reactions.”

The Olympic Games, or Olympics, is an international sporting event held every two years, alternating between the Summer Olympics and the Winter Olympics. Before 1994, the Summer Olympics and Winter Olympics were staged during the same year every four years.

Inspired by the ancient Olympic Games held in Olympia, Greece, the modern Olympics was founded by Baron Pierre de Coubertin in 1896. The 1916, 1940, and 1944 Olympic Games were cancelled due to two world wars. Because of the coronavirus pandemic, the 2020 Tokyo Olympics were postponed until 2021. They have been officially scheduled to take place from Jul. 23 to Aug. 8, 2021.

Fact-checking

Keyword searches on Google found the “Olympic Host City Contract” (the contract) on the official website of Bureau of Olympic and Paralympic Games Tokyo 2020 Preparation. The contract was signed by the IOC, the city of Tokyo, and the Japanese Olympic Committee (NOC). Upon review, the paragraph (a) in the Section 66 (page 72) of the contract stipulates five situations under which the IOC has the right to terminate the contract and withdraw the right to host the Olympics from the city. The first one is:

“the Host Country is at any time, whether before the Opening Ceremony or during the Games, in a state of war, civil disorder, boycott, embargo decreed by the international community or in a situation officially recognised as one of belligerence or if the IOC has reasonable grounds to believe, in its sole discretion, that the safety of participants in the Games would be seriously threatened or jeopardised for any reason whatsoever;”

The paragraph (b) in Section 66 says that if the IOC decides to terminate the contract and withdraw the hosting right, it will notify the host city, the NOC, and Organising Committee of the Olympic Games (OCOG), and jointly discuss any remedies for the contingencies. If the contingencies have not been remedied to the reasonable satisfaction of the IOC, it shall be entitled to immediately withdraw the organization right from the city and terminate the contract.

According to Section 74, the IOC has the sole right to finally resolve any disputes pursuant to the contract.

A Reuters news article published May 10, 2021, claims that Japanese Prime Minister Yoshihide Suga said the IOC has the final say on the Games and the government’s role was to take measures so that they can be safely organized. Suga’s speech was also reported by the Hong Kong online news portal HK01.

Thus, according to the contract, the IOC is the only party that has the right to terminate the contract and cancel the games. Also, for any disputes pursuant to the contract, the IOC also has the final right of interpretation, and the host city cannot withdraw the right to host or cancel the Olympics. Therefore, the statement that “the IOC has the sole right to cancel the Olympics” is TRUE.

Concerning the cancellation penalty, the Section 51 provides that,

1) 5% of all sums of money payable to the OCOG in relation to the international Olympic marketing programme (international programme) shall be paid into a general retention fund maintained and controlled by the IOC. If the Games do not take place in the host city (for example, to withdraw the organisation from the city), the retention fund shall be retained by the IOC as liquidated damages without further notice.

2) The IOC shall also be entitled to withhold all or any portion of any payment due or grant to be made to the OCOG. The amount withheld by the IOC may not exceed 25% of the total amount of the payment. The IOC shall be entitled to exercise its right to withhold such amounts for so long as any non-compliance has not been remedied in full.

Therefore, the penalty of breaching the contract, as stated in the contract, are mainly divided into two parts: the first part is the retention fund— 5% of the money payable to the OCOG in relation to the international programme; the second part is 25% of the total amount of any and all payment due or grant to be made to the OCOG.

Section 49 of the contract introduces the relevant content of the international programme. The programme is a worldwide suppliership programme and a worldwide licensing programme relating to the Games. The host city, the NOC and the OCOG undertake to fully participate in such programme and to procure all such rights, with a view to facilitate the sponsors of the international programme, worldwide suppliers, and worldwide licensees in achieving their goals and commercial objectives in the host country.

While the specific amount of the revenue of the international programme was not available online, the official website of the 2020 Tokyo Olympic Games unveiled the fifth version of OCOG and Other Entities Budget. In the (expected) revenue table, the revenues of the three components in the international programme are: TOP sponsorship (The Olympic Partners sponsorship)—$0.5 billion (53.5 billion yen), local sponsorship—$3.3 billion (353.1 billion yen), and licensing revenues—$0.1 billion (10.7 billion yen). The total sum of the above items is $3.9 billion (approx. 417.3 billion yen). If we calculate the retention fund based on this amount, the fund should be 20.865 billion yen.

According to Section 13 of the contract, the payments due or granted to the OCOG can be summarized as follows:
1) The gross revenue generated from all forms of ticket sales pertaining to the Games.
2) 5% of the net revenue from the international programme.
3) 60% of the surplus resulting from the celebration of the Games for hosting the Olympic Games.
4) Other benefits and rights, including the proceeds from the Olympic stamp programme and Olympic coin and banknote programmes, gross revenues derived from all contracts pertaining to the joint marketing programme or the marketing plan.

The budget proposal does not disclose the revenue of Olympic stamp, coin and banknote programmes, nor the revenues from the joint marketing programme and the marketing plan. The surplus cannot be calculated as the Games have not ended yet.

If we calculate the second part of the penalty based on the total expected revenue ($6.7 billion, equal to about 716.9 billion yen) listed in the budget proposal, the second part could be 179.225 billion yen. Then the total amount of the penalty could be 200.1 billion yen, much less than the purported “4 trillion yen for breaching the contract” in the Facebook post. Even if we add the total budget (1.648 trillion yen) and total expected revenue (716.9 billion yen) together, the total amount could reach 2.365 trillion yen, less than the purported “4 trillion yen” penalty as well.

According to the Olympic marketing fact file (2021 version), the 2013-2016 Olympics marketing revenue generation was $5.1 billion (552.12 billion yen). It is comprised of the revenues from 2016 Rio Summer Olympics and 2014 Sochi Winter Olympics. The combined income of the two Olympics is lower than the expected income of Tokyo Olympics. Therefore, even if calculating the penalty based on previous revenue data, the amount is impossible to reach 4 trillion yen. Thus, based on the current available budget and revenue data, the penalty amount is very unlikely to reach 4 trillion yen. There is no evidence supporting the claim.

The statement “Japan will have to pay 4 trillion yen as a penalty for breaching the contract if it refuses to host the 2020 Olympics” is FALSE.