/Tokyo’s 2020 Games squaring up to be Olympic-sized economic flop for Japan
Tokyo’s 2020 Games squaring up to be Olympic-sized economic flop for Japan

Tokyo’s 2020 Games squaring up to be Olympic-sized economic flop for Japan


Tokyo’s 2020 Games squaring up to be Olympic-sized economic flop for Japan

by Zachary Halaschak | The Washington Examiner

The costs have only gotten higher for Japan as it settles in for a spectator-free Olympics like none other in the event’s history.
Tokyo’s bid to host the 2020 Summer Olympics (now being held in 2021) was a long time coming. After being awarded the games in 2013, Tokyo pegged the cost of the 2020 Olympics at $7.5 billion. Since then, that number has ballooned in size, with projections of a $15.4 billion cost forecast in December.
Over the past several years, the country worked hard to invest money in building and improving stadiums and readying its infrastructure for the hundreds of thousands of visitors that were expected to flock to Japan to watch their country compete. And then along came the COVID-19 pandemic.
In March of last year, the International Olympic Committee and the Tokyo Organizing Committee announced that the event was being postponed until July 2021. The setback didn’t come cheap. In December, organizers said that the price of delaying it a year was $2.8 billion, which has now grown to a hefty $3 billion, according to Reuters.
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Japan saw an enormous spike of new COVID-19 infections in April and May, and polls at the time showed that nearly 60% of the Japanese people wanted the games canceled or postponed. A more recent poll found that nearly 80% of people in Japan don’t want it to go forward.
Tokyo stood strong amid the pressure, but in early July, Olympic organizers banned all spectators from attending the games after a state of emergency was declared. Prior to that, international spectators had already been banned, and domestic crowd caps had been set at 50% capacity.
The loss in revenue from ticket sales is stark. In December, estimates were that the sales would provide some $800 million in revenue to the Tokyo Organizing Committee, with domestic ticket sales accounting for 70%-80% of the total sales in past games. The double blow of having not only no international spectators but also no local fans further piled onto the two-week competition’s high cost.
The loss of spectators will not only be felt in ticket sales but will also decrease knock-on spending. Hotels, restaurants, and entertainment venues are all big losers in the decision to not have spectators. Prior to the pandemic, Japan had anticipated that the Olympic Games would boost its tourism industry and result in some 40 million foreign travelers in 2020.
Organizers had forecast that, combined with ticket sales, some $2 billion would be spent on hotels, dining, merchandise sales, and tourism travel while the guests were visiting the Land of the Rising Sun.
Joel Griffith, a research fellow at the Heritage Foundation, told the Washington Examiner that Tokyo might be having some buyer’s remorse now that the Olympics are happening. He said that the biggest loss for the country is the lack of international and domestic spectators.
“There’s going to be these empty stadiums that should be filled with 100,000 people,” Griffith said. “It’s really unfortunate for Japan and for the world that we’re going to see these games occur without that important factor, and that’s having spectators in the stands cheering it on and adding to that energy.”
Even before the COVID-19 pandemic, a lot of past Olympics have come at a net cost to the host country. Governments must build stadiums and other infrastructure to accommodate the crowds that flock to watch the games. Griffith said that after the structures are built and the games end, they go into disuse and repair, with costs accumulating each year.
Still, he said, there is value in the Olympics outside of a pandemic year as it is a source of national pride for the host country and those competing and brings people together internationally.
Griffith, who is based out of Florida for the time being, pointed out that other parts of the world are handling the pandemic differently and noted that in the Sunshine State, there are large-crowd events still going forward, for example, this year’s Super Bowl.
Sponsors have also been hurt by the COVID-19 pandemic. Dozens of Japanese businesses have spent some $3 billion and now worry about their return on investment as international spectators have been banned, and the domestic audience overwhelmingly disagrees that the Olympics should be held amid the health crisis.
Suntory CEO Takeshi Niinami, one of the most prominent businessmen in Japan, revealed to CNN Business that his company chose to not be a sponsor of the games this year because it was “too expensive.” The CEO said that businesses in Japan might have seen a 10% hike in sales if spectators could have been allowed to attend the event.
“I thought that this occasion would be very much a showcase for us,” Niinami said. “I expected a lot of spectators from abroad to visit.”
“The economic losses will be enormous,” he predicted.
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