The British Olympic Association (BOA) has provided an insight into the financial strains to which COVID-19 has exposed National Olympic Committees (NOCs), warning that any late decision to cancel the postponed Tokyo 2020 Olympic Games altogether might cast doubt over its ability to “continue as a going concern."
This might be the case if a further surge in the pandemic forced the Games to be cancelled later than May 2021.
Recent positive vaccine developments have increased confidence that the Games will be able to take place in some form in the Japanese capital as now planned in July and August 2021.
However, it could be devastating for the Movement if the Games came to be blamed for an avoidable spike in infections.
Partly for this reason, caution still appears eminently justified, and further unexpected twists cannot be altogether ruled out.
The BOA told insidethegames that the Board had taken "a transparent and ultra-conservative approach" in deciding to publish the warning.
BOA chief executive Andy Anson told the Financial Times he was “99 per cent sure” that the Games would go ahead.
The warning is included in the more than century-old body’s financial accounts for 2019, which show a pre-tax profit of £2.2 million ($2.9 million/€2.4 million) on revenue of £13.3 million ($17.7 million/€14.8 million).
According to the relevant passage: "A further surge in COVID-19 might potentially result in the cancellation of the Tokyo 2020 Games planned for 2021.
"This would have a significant impact on the BOA’s cash flows, especially if this were to occur in the months immediately prior to the scheduled start of the Games in 2021.
"The BOA has therefore deemed it appropriate to consider the impact of the Games being cancelled in a range of potential scenarios and have identified that additional financial support would likely be required should the Games be cancelled later than May 2021.
"There is no certainty that this will be forthcoming.
"These conditions give rise to a material uncertainty which may cast significant doubt over the company’s ability to continue as a going concern.
"The directors however, consider the likelihood of a full cancellation of the Games in the months immediately prior to the event in 2021 to be unlikely.
"On this basis, the directors believe it is appropriate to adopt the going concern basis in the preparation of these financial statements."
The BOA explained that, after postponement of the Games, it sought to extend the rights of all sponsors through to 2021, where they had been due to terminate in 2020.
The "great majority" of these commercial partners had confirmed this extension.
An agreement completed early this year with British Airways, whose sector has been especially hard hit by the precipitous decline in international travel since the emergence of COVID-19, is described in the new financial report as "currently being renegotiated."
In the meantime, insidethegames understands, the existing agreement remains in place.
According to the report, the BOA had a £2 million ($2.6 million/€2.2 million) bank credit facility available at the year-end to support day-to-day working capital requirements.
This was renewed until next month and "agreed in principle to be extended until December 2021, with an increase in facility to £3 million ($3.9 million/€3.3 million) from July 2021."
This facility is secured on the BOA’s investment portfolio.
The year-end cash balance was £4.1 million ($5.4 million/€4.5 million).
A profit of more than £2 million is now projected for the current year, with a loss of around £3 million expected for the new Summer Games year of 2021.