The economic consequences of the Tokyo Games: 670 million due to the absence of the public

1. elEconomista.es

Japan's Olympic Minister, Tamayo Marukawa, announced Thursday that the Tokyo Olympic Games will be held without spectators in the stands, nor even of local origin, due to the rebound in infections in the capital, and reversing the measure announced two weeks ago to have up to 10,000 spectators in stadiums.

The organizers, who also decided months ago to ban foreign visitors from entering the country during the Games, planned to earn some 670 million euros from the sale of tickets for the Games. Specifically, 9 million entries which would have meant a true record.

"Ticket sales were expected to generate revenue of €670 million for the Tokyo 2020 OCOG (Organizing Committees of the Olympic Games), which would make it the third largest source of revenue for the OCOG and would also help to finance 12% of the general budget", as Liam Fox told MarketWatch, an analyst at the analysis company GlobalData.

In addition to this loss, the absence of an audience could lead sponsors to re-evaluate some of the deals for these Olympic Games. "Investments from national sponsors had broken all previous Olympic Games records with an investment of 2,778 million euros. However, without an audience in the stands, these forecasts have been drastically reduced", predicts Fox .

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Ultimate caution

The Tokyo metropolitan authorities reported 920 new cases of COVID-19 on Wednesday, a record since mid-May. The data from the last week place the Japanese capital above the threshold of cases that the Government considers to be of maximum concern, at a key moment given the fear that the sports event will mean an expansion of the COVID-19 pandemic in the asian country.

The head of the organizing committee, Seiko Hashimoto, stated during the meeting that in order to prevent an expansion of infections "it is necessary to send a strong and clear message", and pointed out that those responsible for the event had to "make a difficult decision".

IOC President Thomas Bach said for his part that the organizers "have shown responsibility since the day the Games were postponed" and said he would support "any measure that is necessary to hold an Olympic and Paralympic Games safe for the Japanese people and all participants".

Investment of 12,680 million

In terms of economics, the investment made for Tokyo 2020 is 12,680 million euros, according to the latest version of the budget announced by the organizers, almost 2,000 million more compared to the Rio 2016 Games -10,990 million euros-. An amount similar to London 2012 -some 11,592 million euros- or Athens 2004 -some 8,954 million euros-. And nothing to do with the approximate 26,151 million euros from Beijing 2008 or the 4,106 million from Sydney 2000.

The economic difference between these Games and those of Rio 2016 lies, mainly, in the aforementioned extra cost due to the pandemic added to the sanitary measures, the return of tickets, the increase in insurance costs, extra labor expenses or the creation of new secure infrastructures.

Some expenses assumed by the Government of Tokyo, which will contribute more than 800 million euros, while almost 600 million more euros will be injected from the national coffers. The rest of the capital will come from a private fund financed by the organizing committee, in order to increase the number of sponsorships.

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