A University of Oxford study has declared that the Tokyo 2020 Olympics is already the most expensive Olympics to date. The up-gradation of infrastructure, postponement of the games from 2020 and a blanket ban on spectators to curb the rising rate of coronavirus cases in Japan have all been pivotal reasons behind the skyrocketing of the hosting finances.
Predictions vs Actual Expenditure
The Government of Japan had originally predicted that an estimated US$7.3 billion would be spent on the games when they bid for the 2020 Olympics back in 2013. Submitting a bid alone costs around $100 million due to expenditure on consultancy and organizing. Tokyo had previously spent $150 Million for bidding for the Rio Olympics which was added by $75 million for its successful 2020 bid.
It was then estimated that around $12.6 billion would be spent in the Tokyo Olympics last year before the postponement. The delay in the event has incurred an additional cost of $2.8 billion, making the total expenditure at least $15.4 billion. Studies have projected that an additional $200 million will be added to the bill before the games begin.
How can Japan earn from the Olympics?
With the announcement that spectators would not be allowed in the Olympics, the projected $800 million income from ticket sales for the Tokyo Olympics Committee is now out of consideration as far as net revenue is concerned.
The Olympic Committee is expected to earn around $3 billion from at least 60 Japanese companies that have invested in various areas across the games. An additional amount of at least $200 million was paid by the other sponsors to secure contracts after the Olympics was sponsored.
The Tokyo Olympics has also managed to secure around $2 billion as insurance around TV rights, sponsorships and hospitality. Broadcasting contracts across Asia, Europe and the States have also pumped in around $3 billion for the hosting committee.
Impact on the Japanese Economy
While most Olympic games have managed to provide a profit to the hosting committees, the host nation's economy has always been at a loss when it has come to the Olympics except the Los Angeles Olympics 1984. Olympic Games held in Rio, Sochi, Athens and Montreal have been economic disasters, as countries are still in debt after years with losses worth billions. The Japanese Economy is no different.
The depreciation of the currency Yen with comparisons to the stronger currencies like the US Dollar and Euro has made import costs much higher with the renovation of National Stadium and Gymnastic venue alone costing over $2 billion after scraping costlier renovation plans.
The Badminton Plaza cost $330 million, the Aquatics center cost $540 million, the Volleyball arena cost $320 million, and The Games village cost $2 billion, to name a few. Part of the reason for the inflated renovation costs can also be attributed to the lack of labour in Japan. The added cost of $900 million to ensure COVID-19 SOPs can also not be excluded.
It has also been estimated by auditors in Japan that the costs could also shoot to around $26 billion which will include post games infrastructure maintenance.