‘2020 Olympics delay will cost $5.5bn’

time to deal with the constantly changing landscape and the disruption caused by the COVID-19 pandemic,” the IOC said. “The new dates ... also have the added benefit that any disruption that the postponement will cause to the international sports calendar can be kept to a minimum, in the interests of the athletes and the IFs.” Some like the International Triathlon Union preferred the cooler spring during Japan’s cherry blossom season. But that was overridden by the easiest route to lining up venues.

“We are having discussions with all the venues at the moment,” said Toshiro Muto, the CEO of the organizing committee. “At this point we don’t have a final decision. However, some problems have already become apparent.” Muto said organizers haven’t yet heard from any venues saying the rescheduled Olympic events can’t be staged there next year.

“I see this postponement as more of an opportunity for the Olympic Movement, rather than a setback,” he said in an email to the Associated Press.

He said an outright cancellation, rather than postponement, probably was not feasible.

“From a financial point of view, cancellation was not a viable option,” he said. “The repercussions would have been complex and widespread.” Mori and Muto have both acknowledged rejiggering the Olympics will incur “massive costs.” Estimates range between an added $2-6 billion. And Japanese taxpayers will pick up most of the bills, as they have for most of the preparations so far.

Muto promised transparency in calculating the costs, and testing times deciding how they are divided up.

Miyamoto

“There will be costs and we will need to consider them one by one,” Muto said. “I think that will be the tougher process.” Japan is officially spending $12.6 billion to organize the Olympics. However, an audit bureau of the Japanese government says the costs are already twice that much. When it won the bid in 2013, Tokyo said the Olympics could cost $7.3 billion.

All of the spending is public money except for $5.6 billion from a privately funded operating budget. About $3.3 billion in that budget has been raised from local sponsorship deals driven by Dentsu Inc., Japan’s giant advertising and public relations company.

That amount is almost three times more than any previous Olympics.

The Switzerland-based International Olympic Committee is contributing $1.3 billion to the Tokyo Olympics, according to organizing committee documents.

The IOC’s contribution goes into the operating budget.

The IOC had income in the latest four-year Olympic cycle of $5.7 billion, and 73% was from selling broadcast rights with 18% from long-term sponsor revenue. The American broadcaster NBC makes up half of the IOC’s broadcast revenue and pays more than $1 billion for the rights to each Olympics.

The IOC also has almost $2 billion in reserve funds and insurance to cover emergency situations.

Both Mori and Muto have said the cost of rescheduling the Olympics will be “massive” – local reports estimate billions of dollars – with most of the expenses borne by Japanese taxpayers.

Muto promised transparency in calculating the costs, and testing times deciding how they are divided up.

“Since it (the Olympics) were scheduled for this summer, all the venues had given up hosting any other events during this time, so how do we approach that?” Muto asked. “In addition, there will need to be guarantees when we book the new dates, and there is a possibility this will incur rent payments. So there will be costs incurred and we will need to consider them one by one. I think that will be the tougher process.” Katsuhiro Miyamoto, an emeritus professor of sports economics at Kansai University, puts the costs as high as $4 billion. That would cover the price of maintaining stadiums, refitting them, paying rentals, penalties and other expenses.

A swathe of the world’s top sports competitions, tournaments, and professional leagues have been canceled or postponed due to the coronavirus outbreak. Last week, the health emergency claimed arguably the biggest prize in all of sport, the 2020 Summer Olympic Games, which was scheduled to open in Tokyo on July 24th.

News about the Tokyo Olympics being postponed to 2021 has shaken organizers, sponsors, and media companies who have invested billions of dollars in the run-up to a unique sporting event.

The delay of the Tokyo Games is expected to produce a costly financial hit, with total losses stretching to over $5.5bn this year, according to data gathered by LearnBonds.

Nevertheless, the financial hit of suspending the largest international sporting event till 2021 will be significant, revealed the Statista and Kansai University data. Given the commitment and training involved in the lead up to an Olympic year, this delay already had a massive impact on the 11,000 Olympic athletes and 4,400 Paralympic athletes preparing to compete in the event. Many of whom attempted to train for a number of weeks in countries that already imposed lockdown restrictions.

Their $3.56bn worth preparations for the Olympic Games is counted as a financial loss. Also, the Olympics were expected to produce a long-term economic impact in Japan, bringing more than $2bn or 218.3bn yen in revenue, mainly through tourism, domestic spending, the urban development of the nation’s capital, and the continued use of new facilities.

Maintenance, repair, management of stadiums, and the Olympic village is forecast to generate around $210m in costs, while the public relations and communications are expected to cause $91m million worth expenses.

Postponing the Olympic will cost broadcasters and commercial partners millions of dollars in revenues. Especially considering that Japanese businesses had a huge share in the Tokyo Olympics budget, putting a record of $3.18bn in sponsorships. In comparison, both the London 2012 Games and Rio de Janeiro 2016 Games raised three times less from local sponsors.