Already before the 1928 Olympics, the FIFA and the IOC had been in conflict over amateur rules. When FIFA allowed professional players to compete at the inaugural World Cup in 1930, football was scratched as an Olympic sport by the IOC Executive committee. It was reinstated for 1936, but amateur rules were enforced. Players were not allowed to receive any compensation, including wage compensation paid to their employers. This ruling caused several European countries to withdraw their entries, and most South American teams forfeited as well.
A major surprise occurred in the first round of the tournament, when medal favourite Sweden was eliminated by Japan despite leading 2-0 at half-time. Another Scandinavian team, Norway, caused a surprise by eliminated the home team in the quarter-finals. The match was attended by German chancellor Adolf Hitler, who reportedly left the stadium in anger after the German loss. Norway eventually held on for third place. The most notable match, however, was another quarter- final, Peru v Austria. The match saw Peru come from 0-2 behind to win the match 4-2 after extra time. But the contest was marred by rough play from both sides, and in overtime several Peruvian spectators stormed the field and held the Austrian players. Because of this, Austria filed a protest, which was upheld by the jury of appeal. A replay was ordered, but Peru failed to show up for that match, with Austria advancing by forfeit. Back in Lima, the decision to replay the match caused riots at the German and Austrian embassies.
The Austrians reached the final, in which they played Italy. Italy was the reigning World Champion, but all of the 1934 players were professionals and not allowed to play in Berlin. As in 1928, the final score was 1-1 after 90 minutes. Italy scored quickly in overtime, and the exhausted Austrians were unable to crack their opponent’s defense in the remaining minutes. Three players would also play on the Italian squad that won the 1938 World Cup: Alfredo Foni, Ugo Locatelli and Pietro Rava.