Panam Sports has taken legal action against Rede Record de Televisão following the Brazilian television network’s decision to cancel its contract to serve as the broadcaster for the Santiago 2023 Pan American Games.
Rede Record de Televisão, also known as TV Record, signed a contract in August 2016 to extend its relationship with Panam Sports for the 19th edition of the Pan American Games.
The contract would see the TV Record serve as the rightsholder for the Games in member nations and territories, including securing sub-licensing agreements.
TV Record had served as the rightsholder for last year’s Pan American Games in Lima.
The company reportedly cited the impact of the coronavirus pandemic and an imbalance between the Brazilian real compared to the United States dollar for cancelling the contract.
Panam Sports had been due to receive $9.8 million (£7.3 million/€8 million) from TV Record.
This included a delayed payment of $4.8 million (£3.5 million/€3.9 million) for 2019, as well as $5 million (£3.7 million/€4.1 million) due this year.
Panam Sports secretary general Ivar Sisniega acknowledged the loss of TV Record was a financial blow and confirmed the organisation has taken legal action in Brazil.
"The situation with our main broadcaster TV Record has come to an end, they informed us in the middle of this year," Sisniega said.
"This certainly is a financial blow.
"We have taken legal action in Brazil, we are following the legal course.
"We will be going to market to sell the rights for Santiago.
"We have lost some income from TV Record, but we are going to make sure that the economic impact will be the least possible.
"We believe most income will come in 2022 and 2023, as this is not the best time to sell rights for the Games."
Panam Sports reported a deficit of $6.1 million (£4.5 million/€5 million) for 2019, which it said was planned as part of efforts to provide increased support to National Olympic Committees (NOCs).
The organisation received $30.3 million (£22.5 million/€25 million) in income, with expenditure reported as $36.4 million (£27 million/€30 million).
Panam Sports had received $10 million (£7.4 million/€8.2 million) for television and radio rights in 2018 and 2019 for last year’s Pan American Games in Lima.
Income in 2019 included $3.3 million (£2.4 million/€2.7 million) in marketing rights from Lima 2019.
A first payment of $4 million (£3 million/€3.2 million) in marketing rights for Santiago 2023 and sponsorship income of $600,000 (£440,000/€493,000) was also received.
Panam Sports highlighted strong results from its cash and investments portfolio, with $46.2 million (£34 million/€38 million) in cash, short-term investments and portfolio investments with Credit Suisse making $3.9 million (£2.9 million/€3.2 million) during 2019.
The organisation’s fixed- and mixed-income portfolio has earned $3.2 million (£2.3 million million/€2.6 million) since its inception in 2018.
Panam Sports treasurer Richard Peterkin said the organisation had been forced to adjust its budget in 2020 due to the coronavirus pandemic, which has led to both reduced income and expenditure.
Peterkin said the outcome is not as gloomy as might be expected.
"We did not sit still, from day one we looked at what we should do," Peterkin insisted.
"We looked at how we could make up for the income we would not get and reduce expenditure that was not critical and how best to cope with the new reality.
"We have ended the year at pretty much a breakeven basis, but without the NOCs feeling any loss in the programmes and benefits we can give to them, thanks to the strength of the organisation and our reserves.
"We have the funding to deal with everything."
A total of $45.8 million (£34.1 million/€37.6 million) from Panam Sports, as well as $26.6 million (£19.8 million/€21.8 million) from IOC, has been distributed to NOCs from 2017 to 2020.
Panam Sports highlighted that funds were used to support NOC activities and athlete preparation, as well as the hiring of coaches.
Infrastructure projects, such at the development of headquarters, and the Olympamerica project were also supported.