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  • Tokyo's 2020 Olympics are already the most expensive summer games ever.

  • And that's before the games have even taken place.

  • The Japanese public is largely against them in the midst of a pandemic.

  • And there's no guarantee they will happen at all.

  • Now, the city of Tokyo, the International Olympic Committee,

  • and athletes themselves are bleeding cash.

  • It all adds up, so

  • money is stretched a little thin right now.

  • But the problems run deeper than the delay.

  • So what makes the Tokyo Olympics so expensive?

  • When Tokyo won the bid for the Olympics in 2013,

  • the cost estimate was $7.3 billion.

  • Today, expert estimates run to $26 billion.

  • The problem starts with the venues

  • 43 of them to be exact.

  • The National Stadium is meant to be the site

  • of the opening and closing ceremonies,

  • as well as track and field events and soccer.

  • It was a financial disaster before a single brick was laid.

  • Japan hired star architect Zaha Hadid for the design.

  • But cost estimates quickly ran well over budget.

  • And when the price hit $2 billion, the plan was scrapped.

  • Version two didn't fare much better.

  • Japanese architect Kengo Kuma

  • designed the 68,000-seat stadium

  • with a mix of steel and wood

  • from every single one of Japan's 47 prefectures.

  • The cost? $1.4 billion.

  • The design of the gymnastics center basically didn't change,

  • but the cost more than doubled

  • by the time it was completed in 2019.

  • So, the yen's depreciation means import costs are much higher.

  • So lots of construction materials

  • are all imported from other countries.

  • So that also gave rise to the additional cost

  • in the construction sectors.

  • With eight new venues and 10 temporary ones,

  • costs added up quickly.

  • There's a plaza for badminton and pentathlon,

  • an aquatic center for swimming and diving,

  • the volleyball arena,

  • and of course, the canoe and kayak center.

  • And that's just to name a few.

  • thing about the Olympics.

  • It's the only project type we have found

  • where we can't even find one project

  • that was done on budget.

  • Each and every one of them, for which data exists,

  • have run over budget.

  • While cost overruns at the Olympics

  • are something of a biennial tradition,

  • a number of factors made Japan's expenditures worse.

  • The construction cost is rising

  • partly because of this rising cost,

  • as a result of a serious labor shortage

  • in construction sectors.

  • And that's part of why

  • the construction of 21 buildings in the Olympic Village

  • has a price tag of nearly $2 billion.

  • That cost is supposed to be offset

  • by selling apartments to the general public

  • after the Olympic Games.

  • Today, they are sitting empty.

  • The yearlong postponement

  • increased operational costs by another $1.6 billion.

  • Tokyo covered maintenance for all venues,

  • ramped up security, and paid to rent the Olympic Village

  • for a year instead of a month.

  • Lots of stadiums and some sports players' housing,

  • those are just left empty without being utilized.

  • So there is an opportunity cost there.

  • This included canceling

  • many of the warm-up events

  • that would have brought in revenue.

  • The controversy over holding the games

  • grew amidst rumors that Japan

  • decided to cancel the games,

  • though the rumors were quickly denied

  • by the government and the IOC.

  • To be honest, the public feels

  • probably it's better the games will be canceled,

  • or at least postponed.

  • However, the companies have a different view.

  • The corporate sector,

  • they definitely want to hold a games this year.

  • The International Olympic Committee

  • doesn't invest in infrastructure,

  • but maintains requirements on venue sizes.

  • The IOC has an interest in getting the best show,

  • you know, with the most viewers.

  • And they're actually not too concerned about costs.

  • The Olympics draws millions

  • of TV viewers around the world.

  • Nearly three-quarters of the IOC's revenue

  • comes from selling these rights to broadcasters like NBC.

  • The opening and closing ceremonies

  • attract the biggest audience,

  • featuring hundreds of performers, laser light shows,

  • fireworks, and the lighting of the Olympic cauldron.

  • Those events in Tokyo have an expected cost of $118 million.

  • For all the burden of hosting the games,

  • Tokyo will see almost no share

  • in the valuable broadcast rights.

  • And the host city could be out even more

  • with the loss of ticket sales,

  • which are expected to reach more than $850 million.

  • If the games do go forward,

  • $900 million in added COVID precautions

  • will bring the total cost of the delay to $2.8 billion.

  • The Tokyo Olympic organizers have to prepare

  • about 300 doctors every day.

  • Additionally, 400 nurses.

  • That is quite difficult.

  • While all these numbers seem like a burden

  • for a host city to endure,

  • there's also the cost to the individual athlete.

  • Allan Bower is a gymnast on the US national team

  • trying to make his first Olympics.

  • We set up a gym in my garage. Worked out there.

  • You know, we just tried to do everything that we could,

  • but my world kind of got flipped upside down when COVID hit.

  • A good pommel horse can cost $5,000.

  • The protective mats around it? $1,500 each.

  • Ceiling-mounted rings? $600.

  • The garage? Part of his $1,100 a month in rent.

  • Luckily, he was spared a lot of those costs.

  • We had a couple of gyms

  • send us some of the equipment.

  • We had a bunch of support

  • from all around the state of Oklahoma and Texas.

  • It's hard to imagine that all of this

  • might be for nothing.

  • There's still a real chance the Olympics

  • could get canceled outright.

  • Some event organizers already learned their lesson.

  • The Wimbledon tennis tournament

  • took out insurance against virus-related pandemics in 2002,

  • when SARS threatened to become a global pandemic.

  • Wimbledon actually netted about $140 million this year

  • when it had to cancel because of COVID.

  • In Japan, insurance losses of a complete cancellation

  • are estimated at $2 billion to $3 billion,

  • not even half of Tokyo's original bid to host the games.

  • The Tokyo Organizing Committee

  • now says its budget is $15.4 billion

  • twice the original estimate.

  • But experts, and even Japan's auditor, disagree.

  • It's a boondoggle that may change the Olympics forever.

  • Whether the party in Tokyo happens

  • remains to be seen.

  • But the bill is coming due.

Tokyo's 2020 Olympics are already the most expensive summer games ever.

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How The Tokyo Olympics Became The Most Expensive Summer Games Ever | So Expensive

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    nanako.kamiya posted on 2021/04/15
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