Money, money, money: the cost of Tokyo’s pandemic-delayed Olympics
TOKYO—Despite growing local opposition amid the coronavirus pandemic, the Tokyo Olympic Games that were postponed last year will get underway in less than two months – barring “Armageddon,” as one International Olympic Committee member said.
But the delay so far has been expensive in various ways. Here are some areas where costs have grown, and where income that had been expected will not materialize.
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Tokyo 2020 Olympics organizing committee president Seiko Hashimoto and Tokyo organizing committee CEO Toshiro Muto chat before the start of the Tokyo 2020 Olympics executive board meeting in Tokyo, Japan June 8, 2021. Behrouz Mehri/Pool via REUTERS
Organizers said last December that the entire cost of holding the Games would come to about $15.4 billion, including $2.8 billion in costs for the unprecedented postponement from 2020. Since then, the projected bill for postponement has risen to $3 billion.
Figures released in December estimated that ticket sales would contribute $800 million for the Tokyo organizing committee. But much of this could be lost given that foreign spectators are banned, and domestic fans may be sharply limited in number at best, or even absent – a decision on whether to admit Japanese fans is expected later in June.
Local ticket sales have typically accounted for 70-80% of the total at past Olympic Games. Organizers said in March, when foreign fans were banned, that they planned to refund around 600,000 tickets but did not say how much this would cost.
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FILE PHOTO: An advertisement for 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 together paid a record of more than $3 billion to sponsor the Games. Sponsors paid another $200 million to extend contracts after the Olympics were postponed.
That does not include partnerships with Japanese companies Toyota, Bridgestone, and Panasonic, and others such as South Korea’s Samsung, who through a separate program for top-tier sponsors have separate deals with the International Olympic Committee (IOC) worth hundreds of millions of dollars.
INSURANCE
A 3D printed Olympics logo is seen in front of displayed “Tokyo 2021” words in this illustration taken March 24, 2020. REUTERS/Dado Ruvic TPX IMAGES OF THE DAY
Although the cancellation scenario is looking less likely by the day, global insurers would face a hefty bill should that happen, with estimates running to a loss of $2-3 billion.
The IOC takes out about $800 million of protection for each Summer Games, which covers most of the roughly $1 billion investment it makes in each host city.
Local organizers in Tokyo will have taken out a further policy, estimated at around $650 million.
Analysts with the financial services firm Jefferies estimate the insured cost of the 2020 Olympics at $2 billion, including TV rights and sponsorship, plus $600 million for hospitality.
MEDIA
Tokyo 2020 President Seiko Hashimoto looks on as actor Satomi Hishihara and Paralympian Aki Taguchi light the celebration cauldron on the first day of the Tokyo 2020 Olympic torch relay in Naraha, Fukushima prefecture, Japan March 25, 2021. REUTERS/Kim Kyung-Hoon/Pool
Broadcaster NBCUniversal had reaped a record $1.25 billion in U.S. national advertising spending for the Games before they were postponed in 2020 and has spent the past year trying to get sponsors to support them again this year, entertainment business magazine Variety reported.
NBCUniversal’s parent company, Comcast, agreed to pay $4.38 billion for U.S. media rights to four Olympics from 2014 to 2020, it added.
Discovery Communications, the parent of television channel Eurosport, has agreed to pay 1.3 billion euros ($1.4 billion) to screen the Olympics from 2018 to 2024 across Europe.
HIT TO THE ECONOMY
A red traffic light lights up on a street near the Tokyo Metropolitan Government Building displaying a banners of Tokyo 2020 Olympics Games in Tokyo on May 31, 2021 after the announcement that the governemrnt extended a coronavirus emergency in Tokyo and other parts of the country until just a month before the Olympics. (Photo by Kazuhiro NOGI / AFP)
The Olympics were originally expected to be a huge tourist draw, but banning foreign spectators put paid to hopes of an early 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 bln). Numbers plunged 87% in 2020 to just 4.1 million, a 22-year low.
Though highly unlikely at this point, a full cancellation would mean lost stimulus of 1.8 trillion yen ($16.4 bln), or 0.33% of GDP, the Nomura Research Institute said in a recent report.
But Nomura Research Institute executive economist Takahide Kiuchi said that loss would pale in comparison to the economic hit from emergency curbs if the Games turned into a super-spreader event.
“If the (Olympic Games) trigger the spread of infections and necessitates another emergency declaration, then the economic loss would be much greater,” Kiuchi said.
