The 2020 Tokyo Olympics are already the most expensive summer games ever–and they haven’t even happened yet.
Thanks to the pandemic, the event was pushed back a year and that postponement cost $2.8 billion. But that’s just a small percentage of the estimated $26 billion the games will reportedly cost when everything is said and done.
So, where is that money coming from and where is it going?
The Costs Added Up Quickly
When the International Olympic Committee awarded Tokyo with the 2020 games back in 2013, the estimated cost was $7.3 billion. But in the weeks leading up to the games, experts predicted the event would cost approximately $26 billion.
According to Business Insider, the money problem began with the venues.
First, It Was The Venues
The National Stadium is the site of the opening and closing ceremonies, track and field events and soccer. But it was a financial disaster before they laid down the first brick.
According to WalletHub, Japan hired star architect Zaha Hadid to design the stadium. But when the costs quickly went over budget and hit $2 billion, they scrapped that plan.
The second version—designed by Kengo Kuma—was a 68,000 seat stadium made from a mix of steel and wood from every one of Japan’s 47 prefectures. The cost for this version of the project ended up costing $1.4 billion.
But construction costs didn’t end there.
Now, Construction Costs Just Continue To Rise
In Japan, a lot of construction material is imported and prices have risen significantly in the past few years. This is evident in the various contraction projects for the Olympics.
The cost to build the gymnastics center was estimated to be $81 million. But when it was completed, the actual cost was more than $200 million, even though the design never changed.
But the venue costs don’t end there. The plaza for badminton and pentathlon will cost $330 million, the aquatic center for swimming and diving will be $540 million, the volleyball arena will hit $320 million and the canoe and kayak center is estimated to be $65 million. And that’s just to name a few.
According to Bent Flyvbjerg, Management Professor at Oxford University, they can’t even find a single Olympic project that stayed on budget.
The Olympic Village Didn’t Help
Granted, cost overruns for the Olympics are actually pretty common. But a number of factors made Japan’s expenditures worse.
In addition to expensive imports, the rising construction costs are also the result of a serious labor shortage in that sector of the Japanese economy. This is part of the reason as to why building 21 structures in the Olympic village costed more than $2 billion.
While on the topic of the Olympic Village, the structures built were supposed to be offset by selling apartments to the general public after the games. But instead, those buildings sat empty for almost an entire year while the Japanese government decided whether or not they would hold the games at all. That postponement cost another $1.6 billion in operational costs for the Olympic Village.
During that time, Tokyo kept up maintenance on all venues, ramped up security and paid to rent the Olympic Village for a year instead of a month.
COVID Precautions Aren’t Cheap, Either
The additional cost of increased COVID precautions have also added to the big money number. With hundreds of doctors and nurses being hired and medical supplies being bought, the Olympic’s added another $900 million to their overall spending total.
And We Can’t Forget About The Opening Ceremony
Another major cost of the games is the opening ceremony, which is estimated to cost $118 million. Why? Well, because we obviously need a laser light show, fireworks, performers and everything else to make a big splash.
And get this. Even with everyone tuning in to watch the opening ceremony, the city of Tokyo won’t get any share of the valuable broadcast rights. That money goes to the International Olympic Committee (IOC) instead.
Who’s Paying For All Of This?
At this point, you may be wondering who is even paying for all of this. Well, the financial burden of hosting the Olympics mostly falls on the host country’s taxpayers.
According to the South China Morning Post, Japanese taxpayers will fund about 55% of the total cost. The rest is privately funded through sponsorships, ticket sales and a donation from the IOC.
But, Ticket Sales Are At A low
However, ticket sales aren’t looking too promising.
The games usually bring in an expected $850 million, but according to Reuters, that number has now been cut in half.
This is partly due to the cancellation of warm up events. The warm up events usually bring in millions of dollars, but due to COVID, the warm up events were canceled and zero tickets were sold. And when it comes to the actual games, the amount of tickets allowed to be sold will be limited.
So, who’s going to cover the overall cost now?
Japanese Citizens Want To Call It Quits
With this large cost full of unknowns, polls show that the majority of Japanese citizens want the games canceled or postponed. But the Olympic Committee, broadcasters and many corporations rather continue to move forward.
So, I guess we will just have to wait and see. Go team, USA!
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