Tokyo closes books on delayed Games; A prize of 13 billion dollars
TOKYO — The final prize money for last year’s COVID-delayed Tokyo Olympics has been set at $13 billion (1.4 trillion Japanese yen), the organizing committee announced Tuesday in its final act before its dissolution at the end of the month.
The cost was double what was expected in 2013 when Tokyo won the Games. However, the final prize money presented by the organizers is lower than the $15.4 billion they predicted at the end of the Olympics just under 11 months ago.
“We made an estimate, and the estimate is lower than we expected,” Tokyo Organizing Committee CEO Toshiro Muto said, speaking through an interpreter at the meeting. ‘a press conference. “As a total amount, whether huge or not – when it comes to this kind of talk, it’s not easy to gauge.”
Accurately tracking Olympic costs – who pays, who benefits, and what the Games are and aren’t spent on – is an ever-changing maze. The one-year delay added to the difficulty, as did recent fluctuations in the exchange rate between the US dollar and the Japanese yen.
When the Olympics opened on July 23, 2021, $1 bought 110 yen. On Monday, 1 dollar bought 135 yen, the highest level of the dollar against the yen for about 25 years. The organizers chose to use a rate of $1 at 109.89 yen to calculate the price in dollars, which the organizers said was the average exchange rate for 2021.
Victor Matheson, a sports economist at Holy Cross College who has written extensively on the Olympics, suggested via email to AP that most “expenses and revenues are in yen, so the exchange rate changing the dollar amounts do not affect how the event “feels” for the organizers.”
Matheson and fellow American Robert Baade studied Olympic costs and benefits in a study called “Going for Gold: The Economics of the Olympics”. They wrote that “the overwhelming conclusion is that in most cases the Olympics are a loss-making proposition for host cities; they result in positive net benefits only in very specific and unusual circumstances.”
Muto said there were cost savings due to the absence of fans, which reduced security costs and venue maintenance costs. He spoke vaguely of “compressing” costs and “simplifying” operations to achieve the reductions.
However, organizers lost at least $800 million in revenue from ticket sales because fans were banned due to COVID. Muto called “baseless” reports before and after the postponement that the costs could reach $25 billion.
There is one undeniable fact: Japanese government entities, mainly the Tokyo Metropolitan Government, covered about 55% of the total expenditure. This amounted to approximately $7.1 billion in Japanese taxpayers’ money.
The privately funded Organizing Committee budget covered approximately $5.9 billion. The International Olympic Committee contributed $1.3 billion to this budget, with the largest contribution of $3.4 billion coming from local sponsors. Organizers also listed $500 million in revenue from an unspecified “insurance payout.”
A 2020 Oxford University study said Tokyo was the most expensive Olympics on record.
In the years leading up to the Olympics, government audits revealed that the official costs could have been much higher than stated.
It is impossible to assess the long-term impact of the Tokyo Olympics, especially in a sprawling city like the Japanese capital where change is constant. The pandemic erased any short-term rebound in tourism. Local sponsors, who paid $3.4 billion to be tied to the Olympics, didn’t seem too happy according to local reports.
Dentsu Inc., the Japanese advertising and public relations giant, may have benefited. He led marketing for Tokyo 2020, received commissions for lining up sponsors and has been linked to an IOC vote-buying scandal linked to Tokyo winning the Games.
The scandal forced the resignation of Tsunekazu Takeda in 2019, an IOC member who also headed the Japanese Olympic Committee. He denied any wrongdoing.
The Games have been hit by other scandals, including the resignation of Yoshiro Mori, the chairman of the organizing committee who made sexist remarks about women. The former Japanese Prime Minister resigned five months before the opening of the Games.
“I was baffled, surprised – it was so unexpected,” Muto said when asked about Mori’s departure. “I really had a hard time dealing with the situation.”
Tokyo presented itself as a “safe pair of hands” in its 2013 bid for the Games.
Tokyo will also be remembered as the first Games which were postponed for a year and then played mostly without fans in a so-called bubble.
Perhaps the most important legacy is the $1.4 billion National Stadium designed by Japanese architect Kengo Kuma. Although it is a new venue, it fits perfectly into its central location.
“The goal should be for hosting costs to be offset by shared benefits so as to include ordinary citizens who fund the event through their taxes,” Matheson and Baade wrote. “Under the current arrangement, it’s often much easier for the athletes to get gold than for the hosts.”
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