The list of cancellations that can be attributed to the global spread of COVID-19 just keeps on growing. Bands and singers have canceled concerts and tours, seasons of every sport imaginable are on hold, and major tournaments have been postponed. The ‘Euro 2020’ soccer tournament planned for this summer will now be happening next summer instead. The Wimbledon tennis tournament – the best-known and most-watched tennis competition in the world – is virtually certain to be called off as well. The highest-profile casualty, however, is the Tokyo Olympics. The long-planned Japanese Olympics now won’t be going ahead until 2021, and that might prove to be the most costly postponement of all.
Staging an Olympics is an enormously lucrative endeavor if everything goes right. There’s tourism money to be banked. There are tickets to be sold. Television rights fees can bring in millions of dollars, and then there’s all the sponsorship and the tie-in products. Every major company in the world wants to link their name to the Olympics through marketing, and tie-in products are so extensive that there are even official ‘Olympics’ games on online slots websites like UKonlineslots. Playing online slots might be one of the most unathletic things you can imagine, but it doesn’t stop the name from drawing money from players. When things go wrong, though, staging an Olympics becomes a bigger gamble th\an those online slots websites have ever seen.
We need only look back as far as Canada in 1976 to see the damage that staging an Olympics can do if things go wrong. The event itself, staged in Montreal, was a resounding success. The quality of the sporting contests was fantastic, the world’s media had a great time, and fans went home happy. The expected windfall, however, never came. The City of Montreal was left with a debt of more than one and a half billion dollars, and that was even more money back then than it is now. In some ways, they’re still paying some of that debt off today. Part of that was Montreal’s fault. Construction work went a long way over budget, and some of the commercial decisions that were taken were so bad that people ended up in jail for them. Tokyo may not have made any of the same mistakes – but the economic impact of their delayed Olympics might prove to be even more damaging.
When the announcement of the postponement of the Games came earlier this week, the International Olympic Committee’s President was keen to point out that Japan was taking the matter so seriously that they didn’t even discuss the costs of the decision. Thomas Bach was quick to praise Japanese Prime Minister Shinzo Abe and his team for their focus on saving lives and doing the right thing, and said that conversations about cost and how much – or to what extent – the IOC can help with that cost could happen another day. For now, the priority is protecting the safety of the athletes and the fans who would have traveled to see the events, and that’s unquestionably the right thing to do. Someone somewhere in Japan will be looking at those costs, though, and they’re going to want to have a very serious conversation with someone about them sooner rather than later.
The most recent figures available on the internet suggests that Tokyo estimated the cost of staging the Olympics to be in the region of 1.35 trillion yen. To put that figure in context, it works out at around twelve and a half billion US dollars. That isn’t enough money to sink the Japanese economy, but it still makes a dent, and it’s a heavy deficit for Tokyo to bear alone – not that anyone is suggesting that Tokyo will be left to carry the can. The figure is controversial, though. Some figures in the Japanese media say that it only covers the money spent on infrastructure, and that if the costs are traced back to the time of the 2013 bid for the Olympics, the figure is actually ten times that high.
Whether the cost was closer to ten billion or one hundred billion, all of the budgets that Japan and Tokyo have drawn up for 2020 would have incorporated the idea of making that money back during the tournament. That’s now not going to happen. There’s going to be a hole in budgets at both regional and national level, and this is a time where global economies can ill afford to have such budget issues. The worldwide impact of COVID-19 has already put economies under incredible pressure. Losing further money to a canceled Olympics is the equivalent of kicking the country while it’s down. It will presumably still make its money back when the Olympics are eventually held in 2021, but that’s another year of paying interest on what will presumably be some significant debts. There will also be new costs incurred in re-arranging the Olympics for next summer, and so the bill will go even higher than it is right now.
All of the above problems would be a lot to deal with for any Government, and yet they don’t paint the whole picture. Dozens of large Japanese companies have paid for sponsorship opportunities that won’t now be open to them. More than three billion dollars is understood to have been paid upfront for sponsorship, and that doesn’t take into account the presumably much larger sums paid by the three biggest sponsors of the 2020 Olympics – Panasonic, Toyota, and Bridgestone. As the benefits of those sponsorships no longer exist, it’s likely that the companies who’ve paid for them will want their money back – and it’s only right that they get it. Once again, someone is going to have to foot that bill, and it won’t be an easy thing to do.
Japan, like many other countries in the world, is currently trying to stave off the threat of recession posed by the coronavirus. That’s a difficult enough job to do without picking up these additional debts and losing out on a lucrative summer event that would have brought billions of dollars of tourist money into the country. Japan will eventually get at least some of that money back when the Olympics finally go ahead, but once the games are over and the final tallies are taken, it may be a case of Montreal 1976 all over again for Tokyo.