Tokyo delayed Olympics: who pays the bills for another year?

Tokyo delayed Olympics: who pays the bills for another year?

TOKYO (AP) – With the Tokyo Olympics postponed to 2021, the multi-billion dollar question now arises: who pays the bills for the delay and how big will they be?

The most likely answer is – mainly Japanese taxpayers.

“Of course there will be costs,” said Toshiro Muto, chairman of the organizing committee, when the report was announced. “As for how much, we don’t have any figures with us at the moment. As to who will bear these costs? Needless to say, these won’t be easy discussions, so we don’t know how long it will take. “

Japanese financial newspaper Nikkei estimated the additional cost at $ 2.7 billion, citing an estimate from local organizers.

The organizers of Tokyo will have to renegotiate new leases on the sites, pay for the maintenance of the arenas and maybe find different playing fields. They will also have to deal with real estate developers who are already selling thousands of apartments in what will be the athletes’ village. The organizing committee also employs 3,500 people and some may lose their jobs due to cost reductions.

Tokyo, led by advertising giant Dentsu Inc., sold $ 3.3 billion in local sponsorships, more than double the amount of the previous Olympics. These brands are clamoring to find out what they are getting for their money. Refunds? Good deals? New contracts?

And nothing can be done before new dates are set to replace this year’s Olympics: July 24 to August 9, 2020.

“The general goal is the summer of next year,” said Yoshiro Mori, chairman of the organizing committee and former Japanese prime minister. “We have to go through programming, international events. Many things will need to be adjusted before reaching a certain deadline. “

Of course, all of the rescheduling problems are compounded by the uncertain spread of the virus and the recent economic downturn.

Muto acknowledged that tough talks were underway with the International Olympic Committee, which controls the games but leaves the host country to bear most of the costs.

First, some basics of Tokyo Olympic funding.

Local organizers and Japanese government agencies say they are spending $ 12.6 billion to host the Olympics. However, a national government audit report in December estimated the costs at $ 28 billion. There is always a debate about what Olympic costs are – and are not – and creative accounting is not unknown.

When Tokyo won the Olympic bid in 2013, it said the total cost would be $ 7.3 billion.

Private sector money represents $ 5.6 billion of today’s total budget. The rest – whatever the grand total – is public money.

Tokyo has spent nearly $ 7 billion on temporary and permanent sites – about 85% on public funds. The most expensive venue is the new national stadium, a $ 1.43 billion national government project.

The Swiss-based IOC, for its part, contributed $ 1.3 billion to finance the Tokyo Olympics, a small fraction of the total cost. The IOC had revenue of $ 5.7 billion for the last four-year Olympic cycle (2013-2016). Almost three quarters of revenues come from the sale of broadcasting rights and 18% from sponsors.

The IOC also has a reserve fund of around $ 2 billion and insurance to cover losses.

Bent Flyvbjerg, author of “The Oxford Olympics Study 2016: Cost and Cost Overrun at the Games”, in an email to the Associated Press, said the IOC should share more costs and called it a “monopoly ” The study found that the Olympics have “the highest average cost overrun of all types of megaprojects”.

Flyvbjerg said the IOC should “recoup more of the games bill, which the IOC benefits from.” Tokyo and Japan will bear the additional costs, unless the IOC makes an exception and expands the reserve fund, which the IOC should do from an ethical standpoint. “

Tokyo planned to use 42 venues for 33 sports. An additional venue was planned for the Paralympic Games. Muto said it was not clear how many sites would be available in a year.

“Some sites that we may have to rent until next year,” he said. “Because on some sites, it takes about a year to prepare them. We cannot remove them and reinstall them for the Olympics. It also means additional costs. “

The biggest puzzle could be the Athletes’ Village, which will house 11,000 Olympians and staff, and 4,400 Paralympians and staff. The sprawling site on Tokyo Bay – 5,632 apartments – is to be sold after the Olympics, and reports indicate that a quarter have already been sold. Some cost more than a million dollars.

One of the developers, Mitsui Fudosan Co., said it had suspended sales of the complex, which will include 23 buildings.

Even re-aligning 80,000 unpaid volunteers could be expensive and create more work. The city of Tokyo also plans to use 30,000 additional volunteers to help fans find train lines, addresses and distribute general aid to non-Japanese people.

Demand for tickets was also unprecedented with 7.8 million tickets available, and demand was 10 times greater than supply. Ticket sales are expected to generate approximately $ 1 billion for local organizers.

All tickets have a force majeure clause, which could free the organizers from paying reimbursements if the coronavirus is deemed “beyond the reasonable control of Tokyo 2020”.

“We do not have a final conclusion on what our policy will be,” said Muto. “Whenever possible, we want to make sure that people who have already purchased tickets will receive special attention.”

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