- GENERAL NEWS
Additional Tokyo Games expenses dwarfed cost savings
6:00 JST, July 2, 2022
The organizing committee of the Tokyo Olympics and Paralympics wrapped up operations this week.
The total cost of the pandemic-postponed Games swelled to ¥1.42 trillion, about double the initial estimate provided during the bidding stage.
Despite the use of existing facilities and pandemic-enforced curtailments, the cost of hosting the Games was often in the spotlight.
The organizing committee was set up in January 2014, about four months after the International Olympic Committee selected Tokyo as the host city. In the bid submitted to the IOC about one year earlier, the cost of hosting a “compact Games” in which 85% of competition venues would be within eight kilometers of the athletes’ village was estimated at ¥734.0 billion.
The estimate contained only the budget items required by the IOC, to make it easier for the committee to compare Tokyo’s bid with the plans of other cities vying to host the 2020 Games.
Although it detailed construction and refurbishment costs for new and existing venues, the figure was a far cry from the expenses actually required to host such a huge event. The document lacked estimates for the construction of temporary infrastructure and security-related items such as surveillance camera installation and contracting security firms, among other things.
“The [original] figure was very different from the actual cost of hosting the Games,” a senior official of the organizing committee said. “Filling that gap was a huge struggle.
The price tag ballooned due to rising personnel expenses and the soaring cost of construction materials needed for the Games. Moreover, the failure to publicly disclose additional expense items that could have been anticipated during the host city selection process undeniably led to public distrust of the committee.
The initial goal of hosting events in a localized area also raised concerns that costs would snowball if it meant more venues would have to be built.
“Why must new venues be built when there are already fantastic venues just a few kilometers away that can be used?” asked Organizing committee Chief Executive Officer Toshiro Muto, a former Bank of Japan deputy governor who expressed doubts about the costs when he took up his post.
The committee set about reviewing the initial plan and calculating the true expenses needed to host the Games soon after being launched. In June 2014, the committee switched to a plan involving the use of existing facilities and initiated discussions with the Tokyo metropolitan government. It managed to shave ¥180 billion off construction costs after selecting an area in Tokyo for new venues for sports such as badminton and volleyball.
In late 2016, the organizing committee released an estimate of ¥1.6 trillion to ¥1.8 trillion for the total cost of the Games, including expenses not detailed during the bidding stage. It was the first time the full scale of the costs had been revealed. Provisional calculations released each December after that hovered at around ¥1.35 trillion until 2019.
A string of European cities had abandoned plans to host the Olympics because they were unable to gain public support for the gigantic outlays required. After picking Tokyo as the host city, the IOC had urged the organizing committee to make good use of existing facilities. The committee’s fresh plan matched neatly with the IOC approach as it saved on wasteful venue expenses.
However, the outbreak of the coronavirus pandemic threw the committee a curveball.
The Games were delayed by one year to 2021 and the organizers revealed that they would need ¥200 billion to cover additional expenses arising from the postponement, such as the temporary removal of nonpermanent facilities, and ¥100 billion for coronavirus countermeasures, such as testing.
The committee decided that “simplifying” the Games was the best course of action. It slashed the number of Games-related IOC and international sports federation officials from overseas and canceled the lavish IOC welcome party that is usually held ahead of the Olympics.
The committee had saved about ¥30 billion by September 2020 by scaling back some of the formalities.
Although revenue from ticket sales plunged from the originally forecast ¥90 billion to just ¥400 million because spectators were largely banned from competition venues, the bill for coronavirus countermeasures, security expenses and some other outlays was lower than anticipated.
Ultimately, the cost of hosting the Games, which was estimated at ¥1.64 trillion at the end of 2020, decreased to ¥1.45 trillion at the end of 2021, after the curtain had come down on the sporting extravaganza.
However, the Board of Audit claimed in 2019 that overall Games-related expenses would top ¥3 trillion if the committee included items left out of publicly released expenditures, such as making Olympic facilities more accessible for people with physical disabilities.
There is no doubt that hosting an Olympics and Paralympics involves massive expenditures.
In May, the organizing committee offered the IOC several cost-saving suggestions at a “handover” meeting in Paris, which will host the 2024 Games.
Suggestions included having the IOC craft an operational model that would allow more accurate expense estimates during the bidding process; using existing facilities, without upgrades or modifications; and following Tokyo’s move of reducing the number of invited officials by more than two-thirds, regardless of the pandemic situation.
If the IOC takes these suggestions on board and reduces the burden of hosting the Games, it could lead to the Olympics being held in a more diverse range of cities.
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