What’s next for Tokyo? $5B losses and countless moving parts

On Tuesday, Japanese Prime Minister Shinzo Abe announced, in front of a handful of mask-wearing journalists, that the Olympic Games will be postponed due to COVID-19.

His two-minute speech confirmed the inevitable and moved sport into uncharted waters. The Olympics have simply never been postponed, and the three times they have been canceled, the world was at war. This news triggers a logistical, financial and scheduling headache for the host city.

The estimated cost to date for the Tokyo Games is roughly $30 billion (GBP25.4 billion). Postponing could mean an additional economic loss of 640.8 billion yen ($5.7 billion/GBP4.9 billion), Professor Katsuhiro Miyamoto, economics professor emeritus from Kansai University, told ESPN. That includes the cost of maintaining stadiums and the Olympic Village for another year, the logistical process of moving the Games and public relations expenditure. Added to this is the lost income from the 600,000 tourists expected to journey to Tokyo, as well as the local public spending.

A whole host of contracts will need to be renegotiated: hotels, transport, equipment, temporary commodities, tents, trailers, generators, seats, contractors, broadcasters, staff, warehouses, maintenance and security. Organizers will have to rebook the 14,000-strong security team and finish training the 80,000 volunteers, whose preparations were interrupted by COVID-19. Given that 204,860 originally applied, there should be plenty of interest if anyone pulls out.

Organizers must decide whether they will allow the newly refurbished Olympic Stadium, which was set to officially reopen during the Opening Ceremony, to be used for other events over the next year. They will also have to clear all 43 venues for the new dates. For example, Makuhari Messe, a busy convention centre that will host wrestling, taekwondo and fencing, will need to be freed up, while the beach volleyball stands will be dismantled and rebooked.

Disruption should be minimal over at the Olympic Village, which will be converted into apartments after the Games. The 4,125 units have already begun selling, but residents are not scheduled to move in until March 2023. Sources tell ESPN that organizers are not foreseeing any difficulties there other than another year’s upkeep.

On the sponsorship side, brands are expected to honour their arrangements with the IOC/Tokyo 2020. “The actual impact of moving the games for many brands is likely a bit of a relief right now,” Richard Barker, managing director of international advertising agency M&C Saatchi, told ESPN. “There is so much else going on in the world that the idea of having another year to build up to what will be a very special Games, seems like a great beacon of hope to focus on. In terms of budgets, there will be some immediate impacts to manage, but a lot of it won’t be wasted work, much of it can be paused and reinvigorated for 2021 around Tokyo 2020 with a far bigger contextual story than it had before this crisis emerged.”

NBC, which has a long-standing broadcast deal with the IOC, said in early March that it has insurance against postponement or cancellation. But the network will need to renegotiate advertising deals.

Nearly 5 million tickets have already been sold within Japan, which organizers are confident they can reschedule. (It is unclear whether refunds will be offered.) But difficulties might arise abroad, where fans planning to travel bought their tickets through approved third-party means, or in conjunction with hotels.

Other sports will have to reschedule their events, such as the 2021 World Athletics Championships and the World Aquatics Championship, both originally slated for July-August 2021. Olympic qualifiers, canceled due to the coronavirus, will need to be put back onto the calendar.

To top it all off, it might not even be legal to postpone the Olympics. The original host-city agreement makes no reference to the possibility and states that the IOC can terminate the arrangement with Tokyo if the Games do not take place in 2020. Expect lawyers to be redrawing the contract immediately.

In short, it’s a brutally complicated process to postpone the Olympics. But if there is anywhere in the world that can cope, it is Japan. Ever since Tokyo won hosting rights in 2013, the committee promised a Games like no other: technologically advanced, within budget and with a clear, long-term plan to ensure the local community would continue benefiting after the circus had left town. As the country unites around minimizing the financial impact and staging a delayed Games, Doug Arnot — chairman of the Broadstone Group and a member of four Olympic organizing committees — thinks there will be “substantial cooperation” within Japan.

These Olympics had already been touted as the “regeneration games” within Japan, a nation still recovering from the devastation of the 2011 Fukushima nuclear disaster. Now, when they do take place, they will be “a celebration of mankind,” said IOC president Thomas Bach, a moment of unity for the world that has survived a pandemic.

“It has the opportunity to be the most emotive and significant Games of our lifetime in terms of the role it can play in recovery and delivering optimism and hope for everyone who loves sport,” Barker said.

The Olympic flame will stay in Japan — hopefully in Fukushima, where the relay was meant to begin — and when 2021 ticks around, we’ll witness a groundbreaking Games.

We will just have to wait a little longer.

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