Tokyo Olympic Games – Japan Likely To Pay a Big Price

The 2020 Olympics finally got underway in Tokyo on July 23, exactly one year later because it postpone due to the COVID-19 pandemic. A far cry from the grand spectacle it supposes to be, the Games are holding behind closed doors in empty stadiums, as spectators are not allowing to see the athletes perform.
The not only public had disappointment but the organizers are facing a massive task to pay the bill. At a time, when only 25% of the Japanese population is fully vaccinating, and the daily caseload has shot up beyond 3,000, the holding of the Games is a matter of concern for both the Japanese public and the visiting athletes. There have been numerous calls for the Olympics to be postponing again or canceled worldwide due to the COVID-19 concerns; however, given the massive investment by Japan, it was clear that unless something dramatic happened, the delayed Games would continue.

Cost Overrun of Nearly 3 Million Dollars Crippling

Massive cost overruns are nothing new for host cities of the Olympics, with hardly any nation being able to stick to the original estimates and projections made at the time of winning the bid. Even though the earnings from TV rights and tourism are not inconsiderable and cited as the logic for hosting the Games, in the case of Japan, the postponement and the uncertainty alone perhaps caused an overrun of USD 2.8 billion. Mind you this is over and above the cost overruns exposed by the financial newspapers.
In 2013, when Tokyo won the right to host the Games, costs were expected to be around $7.3 billion. In December 2019, before it was postponed. The cost estimate had shot up to $12.6 billion, a jump of over 70%. Now the financial dailies, Nikkei and Asahai, estimate that the final bill. It is likely to be $28 billion. Which is way more than the $22 billion reported by the National Audit board of Japan. Not only is Japan having to pay three times more than the original estimate. But is also losing out on the opportunity of giving its tourism. A much-need fillip with the 40 million tourists expected to descend on the island nation.

Games’ Cost Overruns Nothing New

While it may be difficult to find an Olympic Games that did not exceed budgets. Many host cities have learned strict lessons in managing their Games-hit economies. Learning from past mistakes, the residents of Hamburg took the brave step of rejecting the 2015 hosting bid on grounds of excessive cost. But many other cities have learned the lesson a hard way. Montreal, for example, had to grapple with a 720% cost overrun in 1976. While the 1992 Games in Barcelona exceeded the original estimate by 266%. The 2012 London Games cost the city $15 billion going out of control with a 76% overrun. The Rio de Janeiro Olympics in 2016 had an overrun of 352%, resulting in a 314 billion bill. It is not that only the summer Games run past their budgets; the 2014 Sochi Winter Games overshot the original budget by 289% ending in a final cost of $21.89 billion.