Counting the cost of Tokyo's Olympic delay

On top of an initial $19 billion price tag, organisers are facing a huge cost blowout due to Japan's Olympic Games postponement until 2021.

Japan's Olympic delay has upended years of careful planning by organisers and spawned costly headaches for small businesses, hotels and even pro baseball teams, compounding a $US12 billion ($A19 billion) price tag.

The Tokyo Games were postponed last week until 2021 as the coronavirus outbreak deepened, an unprecedented move in the 124-year history of the modern Olympics.

New dates have yet to be set, leaving sponsors and businesses uncertain and scrambling, although July 23-August 8 is firming as the revised time frame.

For Japan, a one-year postponement will likely cost 641 billion yen ($A9.7 billion), according to Katsuhiro Miyamoto, an emeritus professor of economics at Kansai University who studies the economic impact of the Olympics.

He feels the bulk of that, 423 billion yen, will be from actual costs - venue maintenance, reprinting of marketing materials and hiring new volunteers - with the remainder coming from a broader blow to the economy.

That's on top of the $US12 billion Japan spent in the run-up.

The head of the International Olympics Committee has said the delay will mean additional costs for everyone.

For Grapestone Co Ltd, which sells banana-shaped sponge cakes filled with custard, the delay has been a disaster for the Olympic-themed "Tokyo Banana" confection it had spent a year developing.

Grapestone's sales had been falling since February, when coronavirus started to hit tourism. Now vendors are saying they don't want cakes decorated with the 2020 Games logo.

Japanese sponsors, who have paid a record $US3 billion ($A4.9 billion), have complained privately about the uncertainty. Unlike global Olympic sponsors, most Japanese firms have signed up just for a year.

"We need to negotiate whether our current contract can be extended or needs to be re-signed with additional costs," one sponsor said.

"It's not even clear whether we can continue to use the rights or not."

Venues pose a particular problem. Tokyo Big Sight, a colossal exhibition hall on the eastern side of the city, was booked as the media centre for thousands of journalists.

It's unclear whether Big Sight, owned by the Tokyo government, will be available next year given bookings are taken well ahead. The venue has already entered into contracts for 50 bookings in the year starting in April and is in talks for 200 more.

The Olympic village, designed to house more than 10,000 athletes, might prove one of the biggest headaches. It is due to be converted into luxury apartments, many of which are already sold. Tenants are supposed to move in by 2023.

Around 4.5 million tickets have been sold for the Olympics, and another 970,000 for the Paralympic Games. Organisers say they haven't decided yet how to handle tickets, although Japanese media have reported tickets will be valid for the same events next year.

Tokyo organisers have about 3500 people on staff, with a number of those seconded from the government or sponsoring companies.

The postponement will heap more pain on hotels, which have been battered by coronavirus.

"The drop in sales we're seeing is brutal," said Shigeki Kitahara, president of the Ryokan and Hotel Association.

With bookings often made far in advance, it is difficult for owners to shift plans quickly, he said.

"It's a real kick in the guts."


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3 min read
Published 30 March 2020 6:10pm
Source: AAP


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