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It's a Billion-Dollar Headache: The Cost of the Tokyo Olympics

The delay is expensive in various ways.
by Reuters
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The logo of Tokyo 2020 Olympic Games that have been postponed to 2021 due to the coronavirus disease (COVID-19) outbreak, is seen through a traffic sign at Tokyo Metropolitan Government Office building in Tokyo, Japan Jan. 22, 2021
Photo/s: Issei Kato, Reuters

TOKYO -- Despite local opposition amid the coronavirus pandemic, the Tokyo Olympic Games that were postponed last year will get under way in exactly a month - 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.

Olympic costs

Organisers 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.

Ticket revenues are likely to be reduced from more than half from an earlier expected 90 billion yen ($815 million), Tokyo 2020 CEO Toshiro Muto told a June 21 briefing where organisers said spectators would be capped at half venue capacity, with an upper limit of 10,000. Overseas spectators have been banned.

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Organizers initially sold some 4.48 million tickets and the government had expected a tourism windfall. Some 840,000 tickets have since been refunded, but the caps mean another decrease, bringing the total number down to 2.72 million tickets.


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.

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That does not include partnerships with Japanese companies Toyota, Bridgestone, and Panasonic, and others such as South Korea's Samsung, which through a separate program for top-tier sponsors have separate deals with the International Olympic Committee (IOC) worth hundreds of millions of dollars.



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.

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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.


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

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.

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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, 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.

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