Organizers estimate extra ¥200 billion needed to host Tokyo Games

The Tokyo Organizing Committee of the Olympic and Paralympic Games will present the total amount and breakdown to the Tokyo metropolitan government and the central government, and the three parties are expected to meet in December to decide how to share the burden, the sources said.

It was back in March as the coronavirus was raging that then Prime Minister Shinzo Abe and International Olympic Committee President Thomas Bach agreed by telephone that the 2020 Games would be postponed to the summer of next year.

Following the decision, the organizing committee began to delve into what additional costs would be generated by the postponement. Concern was deep at the time within the organizing committee over potential ballooning costs, with one official saying, “It would be good if we can keep it at ¥300 billion.”

However, the organizing committee reached an agreement with the IOC on a number of measures to reduce expenditures, such as cutting the number of athletes and staff of participating countries and regions, rethinking venue decorations, and delaying the hiring of organizing committee staff until just before the opening of the Games to cut personnel costs.

This "simplification" saved ¥30 billion, helping to hold down the estimated additional expenses to about ¥200 billion, according to the sources.

The additional costs cover a wide range of expenses, such as compensation and cancellation fees for those who had originally booked the venues for next summer, personnel expenses for staff whose employment was extended, and the outlay for introducing a new system for ticket refunds.

 

■ Not including virus measures

In regard to costs associated with coronavirus countermeasures, those have been the focus of the government and thus they are not included in the Games-related additional expenses.

“As long as there was a possibility that public money will be disbursed, we trimmed the estimate as much we could,” a senior organizing committee member said.

In December last year, the organizing committee announced that it would cost a total of ¥1.35 trillion to host the Games, a figure that includes the costs of constructing venues, transportation and security. At that point, it was agreed that the organizing committee would shoulder ¥603 billion of the costs, the Tokyo metropolitan government ¥597 billion and the central government ¥150 billion.

After conferring with the metropolitan government and the central government, the organizing committee will release an up-to-date estimate including the additional expenses in December.

The organizing committee has budgeted for ¥630 billion in revenue, but 80% of that was to come from sponsorships and ticket sales. Many of the sponsorship contracts expire at the end of this year, and while the committee continues to negotiate extensions, it is unclear whether it will be able to receive the same level of support due to the pandemic.

If the number of spectators is reduced as an infection countermeasure, there is no way that ticket revenues will reach the planned level. With its revenue base remaining shaky amid the pandemic, the committee will proceed with discussions with the metropolitan government and the central government over bearing the Games-related costs.