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As Tokyo Olympic costs balloon, officials delay discussion on assigning burden

This image provided by the Tokyo 2020 organizing committee show designs of tickets for the Tokyo Olympic Games.

TOKYO -- Though there had been large expectations surrounding the financial benefits of the Olympics after Tokyo was announced as the host city, expenses have surged, with discussions on which party should cover the costs being repeatedly delayed.

    Anticipation surrounding the economic effects of the Tokyo Games is about to end in vain amid the spread of the coronavirus, as tourism, accommodation, and other struggling sectors in the hospitality industry have lost potential guests as spectators will be banned from almost all venues.

    Expenses for holding the Games have instead ballooned due to COVID-19 countermeasures, and this is about to give rise to conflict over what party should shoulder these costs.

    By July 10, it had been decided that the Olympic venues in six prefectures, including the greater Tokyo area, will hold events without spectators, and almost all of the estimated 9 million-plus tickets sold became invalid. Tokyo Organising Committee of the Olympic and Paralympic Games CEO Toshiro Muto revealed during an NHK program on the following day that "revenue from Olympic tickets will fall drastically to only several billion yen (around tens of millions of dollars). It is most certain that revenue and expenses won't balance out."

    A large part of ticket revenue, which was estimated at around 90 billion yen (about $822.6 million), has dissipated completely. Although such a situation had been predicted at an early stage, the organizing committee has avoided facing this reality squarely.

    While Muto spoke of the necessity to "discuss heavy issues among related parties after the games," the reality is that discussion has been pushed back. Former organizing committee head Yoshiro Mori said that he apparently considered the option of holding Olympic events with no spectators, immediately after the games' postponement was decided in March last year. If the organizing committee falls into debt, either the Tokyo Metropolitan Government or the national government would have to compensate for the losses, but related parties have avoided discussing this matter. As the reason for evading the issue, an individual close to the organizing committee explained, "We shouldn't quarrel with each other prior to the opening of the Olympics."

    However, a Tokyo Games affiliate who has been involved in preparations for a long period, said, "When the topic of what entity would shoulder the expenses arose, discussion was repeatedly pushed back for fear of criticism. They're full of irresponsible people."

    Olympic minister Tamayo Marukawa, right, is seen speaking during a meeting of the headquarters for promoting the Tokyo Olympics and Paralympics. Pictured to her left is Prime Minister Yoshihide Suga. (Mainichi/Kan Takeuchi)

    The same goes for ongoing discussions since last March regarding expenses which emerged due to the games' postponement, which were initially estimated at around 300 hundred billion (about $2.74 billion). Discussion was held off due to concern that whoever brought up the topic would end up shouldering the burden, and the decision was not finalized until December 2020. The organizing committee's budget was effectively in the red at this point, and it was decided that the Tokyo Metropolitan Government would cover expenses for 15 billion yen (about $137 million) as "expenses for adjusting income and expenditure."

    The metropolitan government, which took the lead to shoulder the organizing committee's deficit, has also been spending a great amount of public funds as part of COVID-19 countermeasures, and has no financial leeway. Although the metro government's public finance adjustment reserve funds, which correspond to its savings, totaled 934.5 billion yen (about $8.54 billion) as of the end of March 2020, there was a period when the funds dropped to as little as 2 billion yen (about $18.28 million). Meanwhile, the Japanese government, which is the one that proposed the postponement of the Olympics, has been reluctant to shoulder expenses, based on the principle that the metro government is the one that signed the contract to host the games. Olympic minister Tamayo Marukawa said, "Taking into account the financial scale, it's difficult to envision a scenario where the Tokyo government is unable to cover the expenses."

    Looking back, expenses surrounding the hosting of the Olympics have just kept on increasing. When Japan made its bid to host the games, the total cost was estimated at about 734 billion yen (about $6.7 billion). However, the figure was made to appear smaller than its original state, in order to win the bid, and the total cost, including security costs and transportation fees, nearly doubled from the original amount. The latest version 5 budget announced in December 2020 ballooned to 1.644 trillion yen (about $15 billion), with additional expenses due to the postponement and coronavirus countermeasures.

    Furthermore, there are expenses that are not included in the official budget -- games-related expenses such as measures against heat and road maintenance. The Board of Audit of Japan had been pointing out even before the games' postponement that when factoring in such related expenses, the overall cost would top 3 trillion yen (about $27.4 billion). The Tokyo Olympics are just about to kick off on July 23, but the overall picture of costs for the Olympics remains unclear.

    (Japanese original by Yuta Kobayashi, Sports News Department)

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