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Saturday, November 27, 2021

Summer Games in Tokyo: Economic Lifeline or Olympic Money Pit?

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According to the Tokyo Olympics organizing committee, the Summer Games were expected to cost Japan roughly $15.4 billion, up from its 2020 estimates of $12.6 billion. Even if every single aspect of the Olympics had gone according to plan in 2021, the event itself would seemingly have been mired in controversy simply for going forward before any potential financial benefits were measured. 

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Tokyo, Japan immediately prior to hosting the Summer Olympics.

The COVID-19 pandemic hit Japan early in 2020. The country received a fair amount of attention from the international media due to the events surrounding the Diamond Princess cruise ship when 3,711 people representing nine nationalities were quarantined at Yokohama Port for weeks. That ship, showcasing how some authorities in Japan were ill-prepared to handle different scenarios that could arise in a pandemic, may have left a mark on the public — by the following May, when COVID cases were rising across the globe, a survey from major news outlet Asahi Shimbun showed 83% of Japanese wanted the Olympics canceled or postponed.

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2020 Summer Olympics Opening Ceremony in Tokyo, Japan.

Cities make bids to host the Olympic Games for a variety of reasons, including showcasing their venues, promoting local businesses, and tourism. Tokyo successfully hosted the 1964 Summer Games at a cost of roughly $2 billion and the northern city of Nagano was the host of the Winter Games in 1998. However, the exact cost of the latter event is largely unknown due to bid committee member Sumikazu Yamaguchi ordering the accounting documents on the Olympics burned. 

Significant remnants of infrastructure built for the 1964 and 1998 games in Japan remain, including the country’s high-speed rail system, the shinkansen, as well as progress on Tokyo’s subway system and railway network. One of the largest venues for the 1964 games, the Yoyogi National Stadium, still stands and is in regular use to this day. For a city that was largely destroyed by firebombing less than twenty years prior (World War II), the Olympics and the accompanying infrastructure represented Japan reclaiming its place as an economic powerhouse — the country became the world’s second-largest economy by 1968 and remained there until 2010.

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Tokyo Olympics, 1964. Image from the Closing Ceremonies.

As in the 1960s, when Tokyo sought to showcase its modernity to the world through the Olympics, 2020 gave the city the opportunity to push back against some of the negative media coverage that news outlets had brought to the attention of other nations. Local and international media have sometimes called Japan out for its outdated views. For example, prominent Japanese nationals like tennis star Naomi Osaka and Miss Universe Japan winner Ariana Miyamoto have reported challenges in their daily lives in Japan as “hafu,” referring to someone who is half Japanese and half a different ethnicity. 

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Jill Biden watching a football match at the Tokyo Summer Olympics.

Before then prime minister Shinzo Abe requested schools be closed in February due to COVID-19, the Summer Olympics could have potentially been an economic boost for Japan. Hokkaido Prefecture — where the marathon event would later be held — also declared a state of emergency. The Japan Tourism Agency reported that 31.9 million foreign visitors entered the country in 2019, and the Japanese government expected 40 million more for the 2020 Olympics and Paralympics on top of the crowds gathering in hotspots like Kyoto and Hiroshima. 

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7 Aug 2021. U.S. Men’s Equestrian team. Image courtesy of U.S. Army.

Though this number was just a target, the positive impact on the Japanese economy from foreign visitors alone would likely have been significant. Olympic spectators could have made purchases in restaurants, bars, cafes, hotels, trains, and shops as well as potentially looked at Japanese companies for partnerships and investments. 

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DSS at the Summer Olympics in Tokyo.

Some people, locally in Japan and internationally, expressed concern regarding the management of the 2020 Olympics budget. That concern was compounded when the decision was made to bar nearly all foreign spectators from entry to Japan. Most local residents were also not allowed to attend events for the Olympics and Paralympics, which ended on Sept. 5. 

“Pre-COVID, the Tokyo Games had a 73% cost overrun,” said Alexander Budzier, co-author of Regression to the Tail: Why the Olympics Blow Up. “Now it’s 111% according to their own calculations — and if you trust the state auditor, we’re talking about a 244% overrun. It’s hard to see what is due to COVID and what isn’t, because to some extent those costs overlapped.”

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6 Aug 2021. American fencer Sgt. Samantha Schultz at the 2020 Summer Olympics in Tokyo, Japan. Image courtesy of U.S. Army.

Tokyo constructed 8 venues, specifically for the Games, at a cost of roughly $3 billion, and renovated 25 existing ones (venues), all of which have remained mostly empty for the duration of the Games. This effectively meant that ticket sales for the events — estimated to be roughly $800 million — were also forfeit to the cruelty of the pandemic.

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Hovhannes Bachkov at the 2020 Tokyo Summer Olympics.

Some of the unexpected costs and losses were predictable. Tokyo’s bid for the 2020 Summer Games described late July and early August as “an ideal climate for athletes to perform at their best.” However, almost anyone who has been in the Japanese city during the summer months knows how unbearable it can be: consistently high humidity and temperatures surpassing 80 degrees Fahrenheit. As a result, the International Olympics Committee eventually chose to move the marathon events from Tokyo to the northern city of Sapporo, a decision that some lawmakers estimated cost more than $300 million. 

Tennis at the 2020 Summer Olympics venue
Tennis venue at the 2020 Summer Olympics.

COVID-19 cost the Olympics its live spectators and tourism and added the necessity of creating a “bubble” around foreign athletes, support staff, and those in media who stayed in the Olympic Village. According to Real Estate Japan, the 21 buildings needed to house these individuals could have cost up to $2 billion, but they may now be sold and rented out since the games are completed.

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Empty athletic court at the 2020 Summer Olympics.

Then there’s the human factor: the construction workers who built the venues; the organizing committee; and security and staff in the Olympic Village and stadiums, most of whom were not fully vaccinated by the time the first events started. Officials also had to bear the cost of producing and administering thousands of COVID-19 tests to help prevent the virus from spreading within the bubble. 

“It appeared that hosting a large-scale event, originally expecting many overseas guests, would have posed a great challenge to Japan,” said Trevor Jones, a foreign resident and one of the 2020 Olympics volunteers. 

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August 2020. The National Stadium in Tokyo, Japan. Image by K. K. Yam Amot.

The public perception of Tokyo during the Summer Olympics was irreparably damaged. Japan had sought to convey a country calm and in control, with support from most of the public. Instead, Japan’s most populous city is bearing the costs — financial and otherwise — of moving forward with the Games.

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The new national stadium in Tokyo, Japan.

Despite the fact most foreign visitors for the Olympics were not allowed to enter Japan this year, the number of daily infections in the country continued to trend up, peaking at more than 25,000 in late August. The latest COVID data also illustrates how the most recent highs are significantly higher than that of Japan’s previous peaks of roughly 5-7,000 in January and May. This occurred as Tokyo was in a state of emergency, its fourth since the start of the pandemic, expected to continue until Sept. 12. 

Avatar of Turner Wright
Turner Wright
Turner Wright has been a freelance editor and writer for various publications for the last decade, and you can usually find him somewhere abroad. Gets his inspiration from a combination of nerves, green tea, and dark chocolate.
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