TOKYO – Despite growing local opposition amid the coronavirus pandemic, the Tokyo Olympics which were postponed last year will begin in less than two months – except ‘Armageddon’, as a member of the International Committee has said Olympic.
But the delay so far has been costly in a number of ways. Here are some areas where costs have increased and expected revenues will not materialize.
Organizers said last December that the total cost of hosting the Games would be around $ 15.4 billion, including $ 2.8 billion in costs for the unprecedented postponement of 2020. Since then, the bill projected for carryover rose to $ 3 billion.
Figures released in December estimated ticket sales would contribute $ 800 million for the Tokyo organizing committee. But much of that could be lost given that overseas spectators are banned and domestic fans may be limited in number at best, or even absent – a decision on whether or not to admit Japanese fans is expected later in June.
Local ticket sales have typically accounted for 70-80% of the total in previous Olympic Games. Organizers said in March, when overseas fans were banned, that they planned to reimburse around 600,000 tickets, but did not say how much that would cost.
More than 60 Japanese companies have together contributed a record amount of more than $ 3 billion to sponsor the Games. Sponsors paid an additional $ 200 million to extend contracts after the Olympics were postponed.
This does not include partnerships with Japanese companies Toyota, Bridgestone and Panasonic, and others like South Korean Samsung, which, through a separate program for top sponsors, have separate agreements with the International Olympic Committee. (CIO) worth hundreds of millions of dollars. .
Although the cancellation scenario seems every day less likely, global insurers would face a hefty bill if it did, with estimates ranging up to a loss of $ 2 billion to $ 3 billion.
The IOC writes about $ 800 million in protection for each Summer Games, which covers most of the roughly $ 1 billion investment it makes in each host city.
Local Tokyo organizers will have purchased a new policy, estimated at around $ 650 million.
Analysts at financial services firm Jefferies estimate the insured cost of the 2020 Olympics at $ 2 billion, including TV rights and sponsorship, plus $ 600 million for hosting.
Broadcaster NBCUniversal had reaped a record $ 1.25 billion in domestic ad spend in the United States for the Games before it was postponed to 2020 and has spent the last year trying to get sponsors to back them up again this year, reported the entertainment business magazine Variety.
NBCUniversal’s parent company, Comcast, has agreed to pay $ 4.38 billion for U.S. media rights to four Olympics from 2014 to 2020, he added.
Discovery Communications, the parent company of the Eurosport television channel, has agreed to pay 1.3 billion euros ($ 1.4 billion) to broadcast the Olympics from 2018 to 2024 across Europe.
STROKE THE ECONOMY
The Olympics were originally intended to be a huge tourist draw, but the ban on foreign spectators put an end to hopes of a rapid recovery in inbound tourism, frozen since last year.
In 2019, Japan hosted 31.9 million foreign visitors, who spent nearly 4.81 trillion yen ($ 44 billion). The numbers plunged 87% in 2020 to just 4.1 million, a 22-year low.
While highly unlikely at this point, a complete cancellation would mean a loss of stimulus of 1.8 trillion yen ($ 16.4 billion), or 0.33 percent of GDP, the Nomura Research Institute said in a recent report. .
But Nomura Research Institute executive economist Takahide Kiuchi said the loss would be pale compared to the economic blow caused by the emergency restrictions if the Games turned into a full-scale event.
“If the (Olympics) trigger the spread of infections and require another declaration of emergency, then the economic loss would be much greater,” Kiuchi said.
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