UK: The Sport Lawyer - Olympic Funding Dispute Heads To IOC Mediation

The International Olympic Committee (IOC) has been forced to try and settle a dispute that has arisen between the British Olympic Association (BOA) and the London Organising Committee (LOCOG), two of the Game's most high profile stakeholders. Essentially the dispute centres on whether or not the costs involved in staging the Paralympic Games (which is likely to run at a loss) should be separated from the profits generated by the Olympic Games. LOCOG argue that there should be no separation, whereas the BOA believe they should be separated. Predictably, the dispute boils down to money: the BOA believes it is entitled to a larger tranche of any surplus once the Games close.

As matters stand, if there is a surplus from the Olympics, 60% would be reserved in trust for sporting legacy, and the remaining 40% would be split equally between the BOA and the IOC. The BOA has stated that it expects the Olympics to make a profit of around £300m, but crucially if the Olympic and Paralympic Games are budgeted together, then the overall profit figure, and therefore the sum ultimately due to the BOA, will be significantly reduced.

The battleground centres on the BOA's view that because the Paralympics have been underwritten by the government, LOCOG is not entitled to divert funds from the Olympics to the Paralympics. The BOA has also submitted that this was a stipulated term of the Joint Marketing Programme Agreement (JMPA) entered into by both parties in 2005. LOCOG has openly disagreed with this interpretation, and stated that it was agreed between all stakeholders that the Olympics and the Paralympics would fall within the same budget.

Comment

It is unfortunate that this dispute has arisen at this stage, particularly as it is hot on the heels of the row over the legacy of the Olympic Stadium. The IOC will therefore want the issues resolved as quickly and painlessly as possible, and a mediation between the parties will be arranged as soon as is practical. Should that mediation prove successful, it will be binding on both parties; however, the difficulty will be finding a middle ground between two parties who have different interpretations of the JMPA, and what the original "vision" was. That difficulty will be compounded by the potentially considerable sums in dispute, and indeed a disagreement over the level of any profits that Olympics may or may not generate.

Hopefully a resolution can be achieved, but should that prove impossible, formal proceedings to seek a declaration as to the terms of contract cannot be ruled out. It is possible that such an action could be brought in the High Court, depending on the terms of any dispute resolution clause; however, the more likely seat would be the Court of Arbitration for Sport, given its expertise in such matters and its ability to fast track any action.

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