With a muted ceremony and an empty stadium the much delayed Tokyo Olympic Games have finally begun. The shadows of cancellation loom as COVID-19 cases continue to rise. There is a lot at stake for Japan apart from safety, prestige and public sentiment (with reference to the amount of money they have pumped in).
How much money are we talking about? About $15.4 billion is how much money Japan has put in, which makes this year’s Olympics the most expensive in history. How much would Japan earn in return? Well, we know that from ticket sales, Japan would only earn a few billion through sponsorships and broadcasting rights.
This is the sad truth about the Olympic Games in general, where host nations burn a hole in their pockets and earn peanuts. Of course, it is all in the spirit of the game, but time and again, the spirit has left countries with huge bills they cannot afford to pay, with some nations even slipping into recession after hosting Olympic Games.
The Olympic Games have finally begun with 11,500 athletes in Tokyo competing for what would be 16 days of adrenaline-induced competitive games.
This year’s tournament would be the most diverse and gender-balanced. But it would also go to be the most expensive. Japan is spending a fortune to host these games. Initially, the cost was estimated to be $12.6 billion. But the delay of the event has incurred an additional cost of $2.8 billion, taking the total expenditure to $15.4 billion and this is besides an additional $200 million that are expected to get added to the bill once the games conclude.
Who would foot this enormous bill? Japan, of course, but the bill would be split three-ways between all the organisers. This includes Japan’s Central government, the Tokyo metropolitan government and local organisers in Tokyo city.
How much would they get in return? This is an uncomfortable question. Japan was expected to earn $800 million from ticket sales, but with no spectators being allowed, this sum is out of consideration. What remains are $2 billion in sponsorships and hospitality, and $3 billion in broadcasting rights; both sums would get split with the International Olympic Committee.
This begs the question, what impact would these games have on Japan’s economy? Auditors estimate that the economic cost could shoot up to about $26 billion if post-games maintenance is taken into account. Part of the blame for this huge loss goes to the COVID-19 pandemic. But the fact is that host nations have always been at loss failing to recover the amount they invested. Here are some examples: the 2004 Summer Olympics in Greece was expected to cost $3 billion but they ended up costing Greece $11 billion, pushing the economy into a gripping debt crisis. The 2014 Winter Olympic Games in Russia was estimated to cost $12 billion, instead, the final cost was around $50 billion (cumulated cost).
How did Moscow afford the bill? Russian Oligarchs bailed it out with their generous contributions. And lastly, the 2016 Rio Olympics was estimated to cost $3 billion; instead, the final cost was close to $13 billion. The city of Rio had to cut healthcare and police spending to afford the losses.
These were just a few examples; almost every Olympic Games in history have left its country with huge bills. Not to mention, dozens of expensive venues, simply left to the elements after a handful of uses. (BusinessDay)
