Under the host city contract with the International Olympic Committee (IOC), any surplus at the conclusion of the Games was to be divided three ways: 20 per cent to the IOC; 20 per cent to the British Olympic Association (BOA) and 60 per cent to be used for the general benefit of sport in the UK.

This has already been chipped away at by a deal entitling the BOA, the British Paralympic Association (BPA) and British Paralympic Enterprises Limited to a percentage of income greater than $815 million (£504 million/€577 million) generated by London 2012 from domestic sponsorship and licensing.

These payments are capped at $12 million (£7 million/€8 million) and would be zero if there is no surplus.

However, they are to be made prior to calculation of any remaining surplus.

Now, in a deal likely to dismay supporters of grass-roots sport, the Government looks to have torn a leaf out of the same book.

The London 2012 annual report and accounts for the year ended March 31, 2011, published this week, makes the following disclosure: "Under the terms of the grant agreement signed in the current year with the Department of Culture, Media and Sport (DCMS), up to £36 million [$58 million/€41 million] which has been made available in connection with the Olympic Village...and other costs relating to venue changes, will be repayable...in the event of a surplus at the conclusion of the 2012 Games."

Moreover, "a further £27 million [$44 million/€31 million]...if drawn down would also be re-payable".

The wording makes clear that any amounts due to the BOA and BPA under the previous deal would be taken out of the pot first.

But otherwise, repayment in each case, though it cannot exceed the surplus, is "before calculation and division of any remaining surplus under the commitments of the host city contract".

Clearly, the move has the potential to reduce substantially the sums likely to be channelled to grass-roots sport in the UK - not to mention to the IOC itself - as a result of the commercial success of the Games.

There is still no guarantee that the 2012 Olympic and Paralympic Games will produce a surplus and, if they do not, deals such as these will be of purely academic interest.

However, the organisers' strong financial performance, into the teeth of the economic problems still gripping the country at large, makes a surplus appear more and more likely.

According to this week's London 2012 financial report, "It is anticipated that the cash inflow produced from existing and new revenue streams, together with continued control over expenditure and working capital, will result in the company being in a positive net cash position through to 30 September 2012".

insidethegames this week revealed that London 2012 is raking in income so quickly it has been able to put £70 million ($113 million/€80 million) on deposit with Lloyds Bank.

The Games organiser also announced this week that it had hit its £700 million ($1.1 billion/€801 billion) sponsorship target.

Contact the writer of this story at [email protected]


Related stories
September 2011: London 2012 deposit £70 million with Lloyds TSB to "maximise" its assets