The events of the 2020 Tokyo Olympics have given sports fans across the globe many memorable moments. However, the people of Japan may just remember them for another reason. And, it’s not a great one.
According to The New York Post, the 2020 Tokyo Olympics are on pace to lose an absurd $30 billion. You read that correctly – $30 billion!
Or so says economist, Andrew Zimbalist, of Smith College. He is an authority on what events like the Olympics cost the host cities. He even wrote a book titled, “Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup.” Another economist, Victor Matheson who teaches at College of the Holy Cross, agrees with Zimbalist’s assessment of the financial situation of the 2020 Tokyo Olympics.
The Tokyo Organizing Committee’s original budget for these Games was $7.3 billion. However, according to Zimbalist’s predictions, the committee will actually spend $35 billion this summer. There is simply no chance, according to both economists, that the Organizing Committee can make up that spending gap. Had fans been allowed to attend, that still would not make up the difference.
“They’re going to get back somewhere in the neighborhood of $4.5 or $5 billion,” Zimbalist said. “So there’s a tremendous deficit there.”
COVID-19 Pandemic Negatively Impacted Finances of 2020 Tokyo Olympics
Unsurprisingly, one of the major issues with the finances of the 2020 Tokyo Olympics is the global COVID-19 pandemic. Due to safety concerns, the Games were moved from 2020 to 2021. Doing so, according to Zimbalist, cost the Organizing Committee an extra $5 billion.
This amount comes from costs for public health needs, COVID-19 protocols, facilities, as well as new contracts with venues. Also, delaying the 2020 Tokyo Olympics also meant there was a delay in selling the Olympic village housing as condominiums.
Matheson has also written a book on the subject. It is titled, “Going for the Gold: The Economics of the Olympics.”
He said it would have been better, financially speaking, to cancel these Games. He said the 2020 Tokyo Olympics are costing the Organizing Committee “more than they’re saving.” He also referred to the Games as a “huge disaster.”
International Olympic Committee Could Make Billions from Games
One organization that has benefitted financially from the Olympics this year is the International Olympic Committee. So, while the Tokyo Organizing Committee is losing billions, the IOC is making billions.
“The IOC keeps the media rights and they keep international sponsors and that’s how they generate their revenue. So, for this year, the combination of the TV rights and the international sponsorship rights are going to be something around $5 billion. As long as the games go on, that’s not affected at all. So, in an odd way, despite this disaster of the Olympics going on, the IOC themselves are coming away with all of their revenue streams,” Matheson said.
Even before the pandemic delayed the 2020 Tokyo Olympics, they were already over budget. It has been estimated that the Japanese citizens might have to face an $800 million taxpayer bailout. To make matter worse, less than one out of every 10 Japanese citizens felt that their country should host the Games.
Both economists believe what has happened in Tokyo will result in nations not wanting to host the Olympics in the future.