Who pays the bills for another year?
New leases for venues among many extra costs after Games postponed
TOKYO— With the Tokyo Olympics postponed until 2021, now comes the multibillion-dollar question: Who pays the bills for the delay, and how large will they be?
The most likely answer is primarily Japanese taxpayers.
“Of course there will be costs,” organizing committee CEO Toshiro Muto said when the postponement was announced. “As for how much, we have no figures with us right now. As for who will shoulder these costs? Needless to say, they are not going to be easy discussions, so we are not sure how long they will take.”
The Japanese financial newspaper Nikkei put the added cost at $2.7 billion (U.S.), citing an estimate from local organizers.
Tokyo organizers will have to renegotiate new leases on venues, pay for maintenance at arenas and maybe find different fields of play. They will also have to deal with real estate developers who are already selling off thousands of apartments at what will be the athletes’ village.
The organizing committee also employs 3,500 staff members, and some may lose their jobs to cost cutting.
Tokyo, driven by advertising giant Dentsu Inc., has sold $3.3 billion in local sponsorships, more than twice any previous Olympics. Those brands will be clamouring to know what they get for their money. Refunds? Make-good deals? New contracts? And nothing much can be done until new dates are set.
“The general target is summer of next year,” said Yoshiro Mori, president of the organizing committee and a former Japanese Prime Minister. “We have to go through scheduling, international events. Many things will have to be adjusted before we come up with a certain time frame.”
The rescheduling problems are compounded by the uncertain spread of the virus and the recent downturn in the economy. Muto acknowledged tough talks are ahead with the International Olympic Committee, which controls the Games but leaves the host country to pick up most of the costs.
Local organizers and Japanese government bodies say they are spending $12.6 billion to put on the Olympics, but a national government audit report in December put costs at $28 billion. When Tokyo won the Olympic bid in 2013, it said the total cost would be $7.3 billion.
Private-sector money makes up $5.6 billion of today’s total budget. The rest is public money .
Tokyo has spent almost $7 billion on temporary and permanent venues — about 85 per cent from public funds. The most expensive venue is the new national stadium, a national government project billed at $1.43 billion.
The Switzerland-based IOC has contributed $1.3 billion to finance the Tokyo Games, a small fraction of the total cost. The IOC had income of $5.7 billion for the last four-year Olympic cycle (2013-16). Almost three-quarters of the income is from selling broadcasting rights, with another 18 per cent from sponsors. The IOC also has a reserve fund of about $2 billion, and insurance to cover losses.
Bent Flyvbjerg, an author of “The Oxford Olympics Study 2016: Cost and Cost Overrun at the Games,” in an email to the Associated Press, said the IOC should share more of the costs and termed it a “monopoly.” The study found the Olympics have the “highest average cost overrun of any type of megaproject.”
Flyvbjerg said the IOC should “pick up a larger part of the bill for the Games, which the IOC profits from. Tokyo and Japan will pick up the added cost, unless the IOC makes an exception and expands the reserve fund, which is what the IOC should do from an ethics point of view.”
Tokyo was planning to use 42 venues for 33 sports. One extra venue was planned for the Paralympics. Muto said it was not clear how many venues would be available a year from now.
Even lining up 80,000 unpaid volunteers again could be expensive and create more work. The city of Tokyo was also planning to use 30,000 added volunteers to help fans find train lines, street addresses, and dish out general help for non-Japanese speakers.