Rule 40: The Olympic Clause a Competition Regulator Broke

What the rule did

For most of its life, Rule 40 meant this: during a window running from nine days before the Games to three days after, an athlete’s personal sponsors could not run Olympic-related advertising, and the athlete could not promote them.

So a sprinter whose career had been funded for four years by a small company could not mention that company in the fortnight when anyone was watching — while the official sponsors, who had paid the IOC for exclusivity, had the field to themselves.

The IOC’s argument was coherent

It is worth stating the case for the rule properly, because it is not absurd.

The Olympic movement is funded largely by sponsorship and broadcast, and sponsors pay a premium for exclusivity. If any brand could advertise around the Games by signing one athlete, the exclusivity the IOC sells would be worth far less — and that revenue funds the federations, the national committees and, indirectly, the athletes themselves.

There is also an ambush marketing problem, which is real. A company that signs a single competitor and runs a campaign timed to the Games has bought Olympic association without paying for it, and every major event has fought this for decades.

Rule 40’s defect was not its aim. It was the cost distribution: the burden fell on the athletes, who are the least able to bear it and who receive the least of the revenue it protects. See Olympic prize money for the same argument on a different front.

Then a competition regulator got involved

In February 2019, Germany’s competition authority found the restriction anti-competitive — a restraint on non-sponsor businesses and on athletes’ ability to earn from their own image.

That is a very different kind of challenge from an athlete complaint. Sports governing bodies are used to internal dissent, and have effective tools for managing it: eligibility, selection, accreditation. A national competition regulator has none of those pressures and no interest in the movement’s internal politics.

The IOC’s response was not to defend the rule to the end. Once the German decision removed the blackout for German athletes, the Executive Board devolved interpretation and application of Rule 40 to the national Olympic committees.

In October 2019, the USOPC overhauled its guidance: athletes could thank personal sponsors, and sponsors could congratulate athletes and run generic advertising during the Games, without the previous in-market timing requirements or compulsory advance submission.

Devolution was the clever escape

Handing interpretation to national committees solved the IOC’s immediate problem without conceding the principle.

The Charter rule still exists. What changed is who decides what it means — and a national committee operating under German or American competition law can permit what its own jurisdiction requires, while committees elsewhere may apply the rule more strictly.

That is a pragmatic answer and a genuinely uncomfortable one. The same Olympic Charter provision now produces materially different commercial rights depending on the athlete’s nationality, at a Games where those athletes compete against each other.

An athlete from a country whose committee is permissive can monetise a gold medal in the week it is won. An athlete from a country whose committee is not cannot. Nothing about their performance differs.

What it demonstrates about sports governance

Rule 40’s history is a clean example of something that recurs throughout this subject: the limits of sporting authority are set by external law, and governing bodies discover those limits when someone outside the movement tests them.

The Bosman ruling did this to football’s transfer system through European free-movement law. The House settlement did it to American college sport through antitrust. Rule 40 fell to a competition regulator applying ordinary commercial law to an arrangement sport had considered internal.

In each case the sport’s own tribunals had upheld the rule for years, and in each case that counted for nothing once an outside court or regulator took an interest.

Sports bodies write their rules as though they were self-contained. They are not, and the discovery is always the same shape: a rule that seemed obviously necessary turns out to be an ordinary restraint of trade wearing a governing body’s letterhead.

For where sport’s own legal authority does hold, see the Court of Arbitration for Sport.