FS Stapleton Alliance comments on the cost of the Tokyo Olympic Games, another of Covid-19’s victims.
Over a continuum of 124 years, the Olympic Games have commenced annually without disruption, but last year the pandemic brought a halt to proceedings and organizers were forced to postpone the games that were already well outside of budget. FS Stapleton Alliance analysts say this may have been one of the pandemic’s more costly losses.
Tokyo bagged the opportunity to host the 2020 games back in 2013, a feat that promised refurbished infrastructure, a boost in tourism, global investment and a heightened international reputation. These benefits, given the current climate, also host a myriad of economic risks for the host city, and analysts at FS Stapleton Alliance have debated whether the mooted returns offset the financial burden. The expense involved in hosting the games has, since 1960, run over budget by an average of 172%. The cost of the 2021 Games, to cover stadium builds, construction of the Olympic Village and marketing, have exceeded $20billion, a stark overrun when looking at the forecasted revenue to be generated, which is sitting at around $6.7billion. This estimated turnover includes the purchase of tickets but the lack of stadium coverage has led analysts at FS Stapleton Alliance to forecast a minimum of $800 million in losses relating to ticket sales. The anticipated loss in revenue and muted returns are further exacerbated by the fact that the host city is only entitled to about half, if that, of the revenue generated, with the bulk going to the IOC.
Analysts at FS Stapleton Alliance also speak to the implicit costs that weigh in, including opportunity costs like debt maintenance. For example, Montreal took over three decades to cover the debt generated from their hosting of the 1976 Olympic Games, whilst Greece’s debt that exceeded billions catapulted the nation into bankruptcy.
With this in mind, and the losses as a result of the pandemic, many are left pondering whether the economic upliftment buoyed by job creation, tourism spikes and investment in infrastructure is enough to justify the expense. On the other hand, if the Games had been cancelled, organizers would have to compensate broadcast affiliates a sum of up to $4billion.