To put the cost of the Olympics into perspective, Montreal, the city which hosted the 1976 games, only finished paying off the debt they incurred in 2006. The 2020 Tokyo Olympics has seen the biggest price tag yet. And it’s adding to the ongoing conversation many cities are having about whether or not hosting the games makes financial sense.
How does a cool $15.4 billion sound? That was the total bill the 2020 Tokyo Olympics dropped on Tokyo’s table. If it sounds like a lot, that’s because it is. The figure is more than twice what was originally estimated, which has become a theme in recent years. The cost of putting on the Olympics inevitably explodes beyond the initial budget.
At least there was a good excuse this time around. The 2020 Tokyo Olympics fell victim to an unprecedented pandemic that delayed the games by a year. The delay in itself led to billions of extra dollars in renegotiated contracts. Not to mention the cost of precautions taken to prevent COVID-19 from spreading within the community of Olympians.
Before Paris has a panic attack ahead of the 2024 games, though, it’s important to note how the costs break down. Japanese taxpayers were only responsible for a little more than half of the total cost. That leaves roughly 6 and a half billion on the shoulders of private funding, ticket revenue, and the IOC. Because the $15.4 billion figure is far from final, with Japanese audits apparently revealing a much higher cost, it’s hard to nail down the proportions.
Even more difficult is figuring out exactly what counts as costs incurred by the 2020 Tokyo Olympics. Infrastructure improvements that were already planned are sometimes accelerated when a city gets the nod. Those generally don’t count toward the total cost.
The 2020 Tokyo Olympics Didn’t Do the Japanese Economy Any Favors
The biggest factor determining a city’s financial success from hosting the Olympic Games is whether or not they already have the infrastructure in place. Los Angeles, a two-time host, already has specific venues built from the 1932 and 1984 Olympics. Therefore, the costs in 2028 will be significantly less than they were for Tokyo.
The Japanese capital built a total of eight new permanent structures for the 2020 Tokyo Olympics. For reference, the National Stadium rang in at $1.4 billion and the Olympic Aquatics Center came in at $542 million. And if the 2016 Rio games were any indication, these facilities will have little to no use in the coming years.
What’s more, economists have studied the impact of the Olympic Games on cities for decades. According to Wolgang Maennig, a sports economist and former Olympian himself, the 2020 Tokyo Olympics will likely do little good for the Japanese economy.
“After three decades of empirical research, economists agree that the Olympics do not generate any significant positive effect on national (or even regional) income, employment, tax income, tourism etc.,” said Maennig, as quoted in the Associated Press.