Money, money, money: the cost of the Tokyo Olympics delayed by the pandemic

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.

OLYMPIC COTS

Tokyo 2020 Olympic Games Organizing Committee Chairman Seiko Hashimoto and Tokyo Organizing Committee CEO Toshiro Muto discuss ahead of Tokyo 2020 Olympic Games Executive Board meeting in Tokyo, in Japan, June 8, 2021. Behrouz Mehri / Pool via REUTERS

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.

SPONSORS

tokyo olympic airport japan

FILE PHOTO: An advertisement for the Tokyo 2020 Olympic and Paralympic Games is displayed at Narita International Airport, amid the coronavirus disease (COVID-19) pandemic, in Narita, east of Tokyo, Japan, June 1, 2021. REUTERS / Issei Kato / File Photo

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. .

INSURANCE

Tokyo Olympics 2020

A 3D printed Olympic logo can be seen in front of the words “Tokyo 2021” displayed in this illustration taken on March 24, 2020. REUTERS / Dado Ruvic TPX IMAGES OF THE DAY

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.

MEDIA

Tokyo 2020 President Seiko Hashimoto watches actor Satomi Hishihara and Paralympian Aki Taguchi light the celebratory cauldron on the first day of the Tokyo 2020 Olympic Torch Relay in Naraha, Fukushima Prefecture, Japan on March 25, 2021.

Tokyo 2020 President Seiko Hashimoto watches actor Satomi Hishihara and Paralympian Aki Taguchi light the celebratory cauldron on day one of the Tokyo 2020 Olympic Torch Relay in Naraha, Fukushima prefecture, Japan on March 25, 2021. REUTERS / Kim Kyung-Hoon / Pool

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

tokyo olympic games japan

A red traffic light lights up on a street near the Tokyo Metropolitan Government building displaying a Tokyo 2020 Olympic Games banner in Tokyo on May 31, 2021 after news that the government has extended a coronavirus emergency in Tokyo and in other parts of the country until just a month before the Olympics. (Photo by Kazuhiro NOGI / AFP)

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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