TOKYO, June 23 (Reuters) – Despite local opposition amid the coronavirus pandemic, the Tokyo Olympics, which were postponed last year, will begin in exactly one month – with the exception of “Armageddon,” a member of the International Olympic Committee said.
But the delay so far has been costly in many ways. Here are some areas where costs have increased and expected revenues will not materialize.
Organizers said last December that the total cost of running the Games would be about $ 15.4 billion, including $ 2.8 billion for the unprecedented postponement from 2020. Since then, the forecast bill has been up for the shift increased to $ 3 billion.
Ticket revenue is likely to be reduced by more than half its previously expected 90 billion yen ($ 815 million), Tokyo 2020 CEO Toshiro Muto said at a briefing on 21.10. Overseas viewers are prohibited.
The organizers initially sold around 4.48 million tickets and the government had expected a tourist stroke of luck. Around 840,000 tickets have now been refunded, but the caps mean a further decrease to 2.72 million tickets.
More than 60 Japanese companies combined paid a record more than $ 3 billion to sponsor the Games. Sponsors paid another $ 200 million to renew contracts after the Olympics were postponed.
That doesn’t include partnerships with Japanese companies Toyota, Bridgestone, and Panasonic, as well as others like South Korea’s Samsung, which have separate deals worth hundreds of millions of dollars with the International Olympic Committee (IOC) through a separate high-level sponsorship program.
Although the cancellation scenario is getting less likely every day, if this happens, global insurers would face a heavy bill, with estimates putting a loss of $ 2-3 billion.
The IOC hedges around $ 800 million for each summer game, which covers the majority of the roughly $ 1 billion investment in each host city.
Local organizers in Tokyo will have another policy that is valued at around $ 650 million.
Analysts at the financial services firm Jefferies estimate the 2020 Olympics insured costs, including TV rights and sponsorship, at $ 2 billion, plus $ 600 million for hospitality.
NBCUniversal had a record $ 1.25 billion in national US ad spend on the Games before they were postponed in 2020, and has spent the past year attracting sponsors to bring them back this year support, reported the entertainment business magazine Variety.
The parent company of NBCUniversal Comcast (CMCSA.O) agreed to pay $ 4.38 billion for U.S. media rights to four Olympics from 2014 to 2020, she added.
Discovery Communications, the parent company of the television broadcaster Eurosport, has agreed to pay 1.3 billion euros (1.4 billion US dollars) to broadcast the Olympic Games across Europe from 2018 to 2024.
BLOW FOR THE ECONOMY
The Olympics were originally intended to be a major tourist attraction, but the ban on foreign spectators thwarted hopes for an early recovery in incoming tourism, which has been frozen since last year.
In 2019, Japan hosted 31.9 million foreign visitors spending nearly 4.81 trillion yen ($ 44 billion). The number fell 87% in 2020 to just 4.1 million, a 22-year low.
Although very unlikely at this point, a complete cancellation would mean a loss of 1.8 trillion yen, or 0.33% of GDP, the Nomura Research Institute said in a recently released report.
However, Nomura Research Institute’s senior economist Takahide Kiuchi said the loss would pale compared to the economic impact of the emergency caps if the games turned into a super-spread event.
“If the (Olympic Games) triggered the spread of infections and required another declaration of emergency, then the economic loss would be much greater,” said Kiuchi.
($ 1 = 110.4000 yen)
Reporting by Elaine Lies; Editing of Lincoln Fest.
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