Leer en Español
The 2020 Olympic Games are finally taking place in Japan as the country records 3,000 positive cases of COVID-19 daily and about 30% of the population has been fully vaccinated.
Due to the sanitary conditions, the Olympic Games will have to be held behind closed doors, which means a hard blow for the organizers of the event who invested heavily to build the facilities in which they will be held.
Despite the fact that the Olympics will be held without public, the construction of the infrastructure for the events had a cost overrun that could almost quadruple the initial estimated number, when the International Olympic Committee (IOC) granted the capital of Japan the right to host the 2020 summer games.
When Tokyo in 2013 was chosen as the city to hold the Olympics, the projected costs were $7.3 billion, the figure was revised in 2019 and the amount rose to $12.6 billion.
The 2019 estimate fell short, Japan’s National Audit Office determined that the costs of the Olympics exceeded $22 billion; while the Japanese financial daily Nikkei and Asahi estimates that the final investment will amount to $28 billion, two thirds of which will come from public funds.
The increasingly expensive Olympic Games
In the last 50 years all Olympic Games have had cost overruns. However, the situation started to get out of control with the Sochi 2014 Winter Games, where it was originally estimated that the organization of the event would cost around $10 billion, but ended up costing more than $51 billion.
Currently, the International Olympic Committee requires more than 35 different athletic facilities, requiring the construction of an Olympic village, facilities for television production companies, a press village, a ceremonial space and even special lanes for transporting athletes.
The cities that invest in this event do so with the intention of obtaining income from tourism and visibility in the international arena. This time, with the Olympics being held behind closed doors, the Japanese may never see a return on their investment.
In the past, the Olympic Games used to be profitable, mainly because of the television broadcasting rights; however, the IOC has been taking an increasing percentage of those revenues. While in Barcelona 1992 it only collected 5% of the broadcasting rights, in Rio in 2016 it took as much as 75% of the revenues.
The other problem brought by the Olympics is the future maintenance of the expensive facilities built for this unique event, which will surely not be held in that city again. From Athens to Rio, the cities that once hosted the Olympic Games have hundreds of stadiums, villas, and coliseums that have fallen into disrepair or are literally in ruins, with no use whatsoever.
Cities aware of the astronomical investments required to hold the Olympic Games have mostly ruled out bidding to host the Games. While 12 cities bid to host the Olympics in 2004, fewer than five did so for 2020 and only two cities did so for the 2022 Winter Olympics, Beijing in China and Almaty in Kazakhstan.
Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica