FASTER! HIGHER! STRONGER! COSTLIER?

- Upasana Sarkar (Editor) , Srimoya Pattnaik (Senior Columnist)

As the world fought against the COVID-19 virus, people everywhere watched with bated breath as Naomi Osaka lit the Olympic cauldron at the end of the symbolic torch relay. The Summer Olympic Games of 2020, postponed due to the pandemic (the first Olympics to be rescheduled!) was hosted by Japan amidst a flurry of precautionary measures.

Despite being pushed back to 23rd July - 8th August 2021, the games retained the ‘Tokyo 2020’ title. And this time there were several unprecedented modifications in the rules and regulations, including no public viewing! The International Olympic Committee stated that, due to the direct transmission of the virus, unlike the Zika virus outbreak during the 2016 Rio Olympics, and the high fatality rate, compared to the H1N1 virus outbreak of the 2010 Vancouver Olympics, strict measures would be taken to prioritize health and safety of the athletes and the citizens of the hosting country. A specialised task force, ‘Here we go’, was assembled by the IOC and the Tokyo 2020 organizers to handle issues arising from the postponement of the games, like sponsorship and accommodation. Places where the qualifying events were held were also changed depending on the restrictions imposed by local governing bodies, like Women’s basketball was shifted from Foshan, China to Belgrade, Serbia. Conducting the mandatory doping tests were also severely restricted.

Apart from the practical problems related to the COVID-19 virus, authorities also shouldered an enormous economic burden that came with hosting the games. The bid to push out rival Italy and host the games cost over $12.6 billion, to which the postponement brought on an added $2.8 billion, making it one of the top contenders for the title of Most Expensive Bids. Out of the approximate $15.4 billion, the Organizing Committees for the Olympic Games contributed $6.7 billion, the Tokyo Metropolitan Government $6.6 billion (overrunning their budget allocation by near 100%) and the Government of Japan $2.1 billion.

Katsuhiro Miyamoto of Kansai University estimated that the cost of delaying the games by a year, including maintenance expenses for unused facilities, would come up to $5.8 billion. Nomura Research Institute estimated that the cost of cancelling the games altogether would be at least $16.4 billion, which would STILL be less than the economic damages projected if another state of emergency was to be declared, which is what happened 16 days before the games even took off. The health cost was high as well, with 71 athletes testing positive before the start of the games and Japan reporting a 26% increase in cases over the previous week.

The insurance taken out was also on a large scale, but was nowhere near enough to cover the approximated losses. The Tokyo Games was protected by the Lloyd’s of London, Munich Re and Swiss Re. The IOC took out $800 million insurance for each Summer Olympics with the total amount of loss insured for 2020 to be more than $2 billion.

The revenue from Olympics is mainly from sponsorship, broadcasting, licensing and ticketing. Moreover, the benefits of hosting the Olympics can be compartmented into short run benefits like tourism, associated spending, temporary jobs and long run benefits like infrastructure, roads, potential business opportunities etc. Despite marketing Tokyo 2020 as ‘The Recovery Olympics’, hosting the games did more economic damage than benefit. Revenue brought in by the IOC was limited to $0.8 billion. Sponsorship brought in only $3.8 billion due to many companies like Toyota, Ajinomoto, Panasonic, Canon, Nichido Fire Insurance Co, Asics Corp etc cancelling or back scaling promotion booths and hospitality programmes. Licensing and ticket sales brought in $0.1 billion and $0.8 billion respectively, due to the games being largely held behind closed doors with no public spectators. Miscellaneous revenue of $1.1 billion was reported. Since viewership is now completely online, telecasting and broadcasting rights could not keep up with the revenue expectations. However, apps like Sky go of the UK, Sony liv of India, Bally sports of Australia and Argentina, Peacock TV etc have seen a surge in downloads.

What is surprising is that, since 1960, every single Olympic game has overrun the budget, and by an average of 172%. Most of the host countries had run into debt, most notably 2004 Athens Olympics worsening the Greek financial crisis, and the Montreal government having to introduce a special tobacco tax to cover the losses arising from 1976 Montreal Olympics. With Neeraj Chopra’s gold win, Indians are enthusiastic about hosting the Olympics. But the question remains - can we bag the gold for the struggling economy as well?