Tokyo 2020 Olympic Games CEO Toshiro Muto speaks during a news conference in Tokyo on Dec. 22, 2020.POOL/Getty Images
The official cost of the postponed Tokyo Olympics has increased by 22 per cent, the local organizing committee said in unveiling its new budget on Tuesday.
In an online news conference, organizers said the Olympics will cost US$15.4-billion to stage. This is up from US$12.6-billion in last year’s budget.
The added US$2.8-billion is the cost of the one-year delay. Expenses come from renegotiated contracts and measures to combat the COVID-19 pandemic.
The Olympics are to open on July 23. The Paralympics follow on Aug. 24.
Audits by the Japanese government over the past several years, however, show the costs are higher than officially stated and are at least US$25-billion.
Tokyo said the Olympics would cost about US$7.5-billion when the IOC awarded the games in 2013. A University of Oxford study this year said Tokyo is the most expensive Summer Olympics on record.
“The Tokyo Olympics are operating in a very tough environment,” Toshiro Muto, the chief executive of the organizing committee, said when asked about the record costs. Muto suggested the games should be looked at as an investment rather than a cost.
Japanese government entities are responsible for all of the costs except for US$6.7-billion in a privately funded operating budget.
“The IOC and TOCOG [Tokyo organizing committee] want the public budget to appear as small as possible not only to guard against public criticism, but also to not discourage future candidate cities,” Franz Waldenberger, director of the German Institute for Japanese Studies in Tokyo, wrote in a recent paper examining Olympic costs.
Waldenberger noted the Tokyo city government and branches of the central government use the Olympics as “a window of opportunity to obtain additional” funding.
Organizers in October announced cost reductions of US$280-million, cutting out frills including hospitality offerings. However, no cuts have been made to the sports program, with a full complement of 11,000 athletes and tens of thousands of officials, judges and sponsors expected to attend.
Muto acknowledged the cost had increased for the opening and closing ceremonies of the Olympics and Paralympics. Organizers were expected to report a figure later in the week. Japan’s Kyodo news agency, citing sources close to the committee, reported the increase is about US$33-million.
Decisions about fans and preventive measures for the pandemic are expected to be rolled out in the spring. Reduced fan numbers will affect ticket sales, a major source of income.
Japan has controlled COVID-19 better than most countries, with 3,000 deaths attributed to the virus. That milestone was reached on Tuesday. New cases have been rising for a month, adding to public skepticism about the Olympics.
In a telephone poll of 1,200 people published this month by Japanese broadcaster NHK, 63 per cent said the Olympics should be postponed again or cancelled, and 27 per cent said the games should be held. The poll was conducted on Dec. 11-13.
The IOC and local organizers have said the Olympics will be cancelled if they cannot be held this time.
Local organizers are trying to recover some of the rising costs by coaxing more revenue from domestic sponsors. About 70 sponsors have already contributed a record US$3.3-billion, driven by Dentsu Inc., the marketing agent for the Tokyo Olympics.
The Nikkei newspaper reported last week, citing unnamed sources “familiar with the matter,” that 15 top-tier domestic sponsors will add an estimated US$150-million to their contributions. It said Japan Airlines, ANA airline and the Tobu Skytower were considering contributions.
Nikkei is also a Tokyo Olympic sponsor, along with Japan’s other leading newspapers: Yomiuri, Mainichi, and Asahi. Several regional papers are also sponsors.
“We would like to increase revenue more than expected, although it is challenging,” Gakuji Ito, the organizing committee’s chief financial officer, said.
Ito said insurance coverage might pay out up to US$500-million to help cover increased costs.
All expenses the organizing committee cannot cover will fall to the Tokyo Metropolitan Government, Ito said.
The budget shows the IOC is contributing US$1.3-billion to cover costs of the games. Its contribution to Tokyo will not increase, Ito said.
Ito was asked if he would seek more money from the IOC.
“No, we are not thinking about it,” he replied.
The IOC’s finances are stressed. It generates 91 per cent of its income from selling broadcast rights and sponsorships. The postponement of the Tokyo Olympics has stalled its revenue flow, increasing the importance of staging the Olympics in Tokyo.
The Beijing Winter Olympics open six months after Tokyo closes, in February, 2022.
The IOC is also facing pressure to support national Olympic committees and international sports federations, many of which rely heavily on IOC contributions.