Tokyo 2020 Olympics postponed to cost $ 5.8 billion

Some of the world’s best sports competitions, tournaments and professional leagues have been canceled or postponed due to the coronavirus outbreak. Last week, the health emergency won arguably the biggest prize in all of sport, the 2020 Summer Olympics, which were due to open in Tokyo on July 24.

News of the postponement of the Tokyo Olympics to 2021 has shaken organizers, sponsors and media companies who have invested billions of dollars in the prospect of a unique sporting event that can trace its history back to ancient Greece. at the end of the 770s BC.

The delay of the Tokyo Games is expected to produce a costly financial blow, with total losses amounting to more than $ 5.5 billion this year, according to data collected by LearnBonds.

The economic impact of stopping the $ 2 billion Olympics

In 2013, when the Japanese capital won its bid to host a quadrennial event, it was estimated that the Tokyo Games would cost around $ 6.6 billion or 730 billion yen. However, by the end of 2019, organizers predicted that the total cost had nearly doubled to $ 12.3 billion, or about 1.35 billion yen.

The Japanese organizing committee has invested 603 billion yen or $ 5.51 billion to host the Olympics, Statista data revealed. The city of Tokyo bore the second highest cost, spending just $ 5 million less than the committee, while the central government gave $ 1.37 billion.

One of the crucial factors in calculating the impact of the postponement of the Olympics on the Japanese economy is that most of this spending has already occurred. This means that the effects of spending have already been factored into the national gross domestic product in recent years.

Nonetheless, the financial blow from the suspension of the biggest international sporting event until 2021 will be significant, data from Statista and Kansai University have revealed. Given the commitment and training involved in preparing for an Olympic year, this delay has already had a huge impact on the 11,000 Olympic and 4,400 Paralympic athletes preparing to participate in the event. Many of them tried to train for several weeks in countries that already had lockdown restrictions.

Their preparations worth $ 3.56 billion for the Olympics are counted as a financial loss. In addition, the Olympics were expected to produce a long-term economic impact in Japan, bringing in over $ 2 billion or 218.3 billion yen in revenue, mainly through tourism, domestic spending, urban development of the nation’s capital. and the continued use of new facilities.

The maintenance, repair, management of the stadiums and the Olympic Village are expected to generate around $ 210 million in costs, while public relations and communications are expected to result in expenses of $ 91 million.

No profit of $ 4.4 billion from referrals and ad offers worth $ 4.4 billion

Postponing the Olympics will cost broadcasters and business partners millions of dollars in revenue. Especially when you consider that Japanese companies held a huge share in the budget for the Tokyo Olympics, registering a record $ 3.18 billion in sponsorship. In comparison, the London 2012 Games and the Rio de Janeiro 2016 Games collected three times less local sponsors.

However, this figure does not include partnerships signed between giant companies such as Panasonic, Toyota and Bridgestone and the International Olympic Committee for the rights to sponsor multiple Games in a row. As major sponsors, the three companies have exclusive deals with the IOC worth hundreds of millions of dollars.

At the same time, Comcast-owned NBC television network set a new record with more than $ 1.25 billion in advertising selling ahead of the 2020 Olympics.

Although the company is insured against events that could affect their investments, the delay of the Tokyo 2020 Olympics will cost them the profit generated by the advertising. Four years ago, when the Games were held in Rio de Janeiro, NBC made around $ 250 million from advertising during the Olympics.

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