Extent of IOC’s Damning Ruling Against BOA Revealed

April 4, 2011

The details of the International Olympic Committee’s (IOC) judgement against the British Olympic Association (BOA) in the row regarding revenue from the London 2012 Olympics with its organisers have been revealed today, April 4.

The BOA have pursued their case with the Court of Arbitration for Sport (CAS), despite the IOC’s damning ruling, even though the IOC clearly states that they have the final say in any disputes arising from the Joint Marketing Programme Agreement (JMPA), which was signed six years ago after London were awarded the Olympics and Paralympics.

The nine-page ruling signed by Urs Lacotte, the former director general of the IOC who resigned due to health reasons last week, and Howard Stupp, its director of legal affairs, and sent to the BOA and London 2012 on March 18, provides little evidence that the BOA’s appeal to CAS will succeed – even if it does get that far.

The ruling reads: “Clause 15.6 (c) of the JMPA reads as follows: ‘should any dispute not be resolved by the respective officials of the NOC and the OCOG within 30 days of reference to them,then either party may give written notice to the other requiring that the dispute be solely and exclusively resolved by the IOC. The decision of the IOC will be final and binding on the parties and it is agreed that neither party will institute or maintain proceedings. in any court or tribunal other than as set forth herein’. Based on that clause, the IOC’s ultimate jurisdiction over this dispute is clearly established. By sending submissions and participating in the proceedings, the parties have also confirmed that they recognise the jurisdiction of the IOC.”

The row is set to dominate the SportAccord International Convention in London this week, having left BOA chairman Colin Moyninah isolated both domestically and internationally. The fact that the affair is overshadowing the event, originally designed to showcase London’s preparations for next year’s Olympics and Paralympics, is said to have irritated IOC President Jacques Rogge, who is due to arrive here today.

David Hemery, the vice-chairman of the BOA, revealed last week that he had written an open letter to Britain’s Olympics sports in which he insisted the BOA did not know that they would only receive any prize after the Paralympics had taken place. 

Hemery stated: “Our board would never have so enthusiastically voted in favour of the proposal if we anticipated that in fact there would be no balanced budget, with no sporting legacy beyond buildings in London.

“To assert we knew this all along is an insult to the common sense decision making of the Board members of that time.”

Yet the IOC ruling makes it clear that this situation had been in place for nearly a decade, even when London were bidding for the Games and that the BOA Board should have known that.

It continues: “As a result of the IOC 2000 Commission Recommendations, the IOC and the International Paralympic Committee (‘IPC’) entered, on 19 June 2001, into an agreement regarding the organisation of the Paralympic Games (‘IOC-IPC Agreement’). As set forth in this agreement, ‘the IOC recognises the need to assist the IPC to secure and protect the organisation of the Paralympic Games’.

“As a consequence, since 2001, all cities bidding to host the Olympic Games have to tender for both the Olympic Games and the Paralympic Games on an integrated basis. This has been reflected in the first host city contract signed after that date, i.e. the Host City Contract for the Games of the XXIX Olympiad in the year 2008, signed on 27 June2001: ‘the Paralympic Games shall be organised by the OCOG approximately ten days following the conclusion of the Games’. Therefore, the staging and organising of the Paralympic Games is now an integral part of the obligations undertaken by an OCOG under the Host City Contract.

“In this respect, all candidate cities and NOCs bidding to host the Olympic Games and the Paralympic Games have to submit their proposed budget for the two Games in a format set out in the IOC Candidature Procedure and Questionnaire. This mandatory format reflects the basic accounting principle that the budgets for the Olympic Games and the Paralympic Games should be integrated so as to result in a single, overall surplus (or deficit). According to the ‘Detailed Olympic Games budget’ template(OCOG budget) provided by the IOC in the 2012 Candidature Procedure and Questionnaire, on page 98, the operational costs of the Paralympic Games are part of the expenditures in the OCOG budget. The Paralympic Games costs are defined as being the ‘costs specifically attributable to the Paralympic Games’ for which the candidate cities were required to “provide a subsidiary schedule that details these costs, if not separately included in the other expenditure line items of the budget, including any direct contribution from the OCOG to the Paralympic Games’. Clearly in the case of London 2012, only a portion of the Paralympic Games costs is contained in this subsidiary schedule, the remainder being included in items related to the Olympic Games, like the preparation of venues.

“Consistent with the IOC requirements set out in the IOC 2012 Candidature Procedure and Questionnaire, the city of London, in its Candidature File, has approached the running of the Olympic Games and the Paralympic Games on an integrated basis and has operated so as to stage both Games from one budget. The forecast budget for the London 2012 Olympic and Paralympic Games provided by the city of London and the BOA in their Candidature File envisaged an integrated accounting across both events resulting in the determination of single ‘surplus’ (or deficit) of LOCOG at the time of its dissolution.”

The IOC points out that every Olympics since Salt Lake City in 2002 had understood this principle.

The ruling adds: “In all these cases, the OCOGs and their respective NOCs understood the “surplus” as being the financial result from the staging of the Olympic Games and the Paralympic Games combined. Each time as well, the surplus was shared accordingly.

“If the IOC would follow the interpretation of the BOA, it would be the first time that the word ‘surplus’ would be understood and applied differently from the time that the host cities had the obligation to stage the Olympic Games as well as the Paralympic Games.”

The IOC warns that if this principle is not followed then the future of the Paralympics could be in jeopardy and that the IPC is closely involved in the selection of the host city.

It says: “The IOC introduced the obligation to organise both the Olympic Games and the Paralympic Games in order to help the IPC financially to stage its event, the money spent for the preparation and the organisation of the Olympic Games contributing to stage the Paralympic Games at reduced cost. It is therefore quite reasonable that the same spirit of solidarity prevails in the relation of an OCOG and its NOC, the money raised in relation with the Olympic Games serving to finance the Paralympic Games,and a possible surplus being established in consideration of the total cost of the Olympic Games and Paralympic Games combined.

“The IPC is associated with the IOC for the selection of the host cities with representation in the Evaluation Commission, and for the preparation of the Olympicand Paralympic Games with representation in the Coordination Commission. These two activities of the IOC are included in a budget called ‘cost of the Games’ which is finally covered by the Olympic Movement from the money produced by the sale of the TV rights. This TV money is only produced by the Olympic Games but also covers costs related to the Paralympic Games. This confirms that the calculation of a global surplus resulting from the staging of the Olympic Games and Paralympic Games make sense.This is even more so because the Olympic Movement also includes some IFs and NOCs which are not involved in the Paralympic Games, as sport for handicapped persons in their country is run by separate organisations.”

The IOC also points out that it would be in its own financial interest for the surplus to be distributed before the cost of the Paralympcis are taken into account but that it will not do that.

It says: “According to Clause 43 of the HCC (Host City Contract), the IOC is also entitled to a share of 20 per cent of the surplus resulting from the celebration of the Games. The IOC would therefore have interest to understand the word ‘surplus’ in the same way as the BOA. However it cannot and does not do so, as it has always interpreted this word as the financial result of the two Games which are integrated and form a global obligation for the OCOG. Otherwise, this would lead to a different result for the 2012 London Olympic Games than applied with respect to all the Olympic Games from 2002 to 2010.

“For all the reasons referred to above, the IOC has no hesitation to determine that the word “surplus” in the JMPA has to be interpreted as the financial result of staging the Olympic and Paralympic Games combined. The IOC feels comfortable to do so as the parties and their leaders at the time, which were familiar with the organisation of previous Olympic Games and Paralympic Games, cannot have understood it differently.”