What is the True Cost of the Olympics Postponement?
With the 2020 Olympics officially postponed due to the COVID-19 pandemic, what comes next for the games? While it may seem simple enough to pick new dates for events and call it a day, it is not that simple. Venues are leased for a specific window of time during the duration of the games, and these now need to be renegotiated for 2021 instead of 2020. Additionally, the organizers of the Tokyo Olympics will have to pay for the maintenance of the facilities for an additional year. The athlete’s village, which was planning on hosting 11,000 athletes and staff, is composed of 5,632 apartments. After the 2020 Olympics, these apartments were to be sold off to private real estate corporations, many of which had already negotiated deals. These deals either need to be delayed, or the Tokyo organizers will need to find new housing for the athletes. Working alongside the Tokyo organizers, advertising company Dentsu Inc. had sold $3.3 billion in local advertising sponsorships. This number is twice that of any other previous Olympics. Will these companies be reimbursed? Will those deals carry over to 2021? Will companies demand a reduced cost for their sponsorships due to the delay? The true cost of the delay is unknown but is estimated to fall between $2.7 billion and $5.7 billion. This figure is when you consider that Japan estimated the total cost of the Tokyo Olympics would be $7.3 billion in 2013. The reported cost is definitely below the true cost as local organizers estimate an actual cost of $12.6 billion. Any additional cost is likely to come at the expense of Japanese taxpayers, making the stakes of delaying the games even higher. The IOC has reserve funds to help cover losses, but only time will tell if they use these funds to help Japan. The IOC operates on a limited income as their primary money-making campaigns come from the Olympics themselves. They rely on any given Olympics to sustain themselves for the time between the games. The loss during 2020 will have repercussions on the Summer and Winter Olympics, as well as the Paralympics.
Nobody knows how the Coronavirus pandemic will play out; nobody knows how long it will take for other sports competitions to return. One of my favorite events to watch during the Olympics is basketball. When thinking about how the pandemic is impacting the NBA and when the league will continue, the best-case scenario is a return in mid-June. However, the NBA plans on finishing the season, whether they jump straight to playoffs, do a shortened playoff, finish the regular season as normal, the season probably won’t end for a few months after that starting point. By that point, it is August/September, and the 2020-2021 season is supposed to start in October, leaving the athletes no time for offseason recovery, no time for rookies in Summer League, and no time for preseason. The next season will likely be delayed, pushing the following season into the summer, interfering with the now 2021 Tokyo Olympics. This is not the IOC’s primary concern, but as a fan of the NBA and Olympic basketball, it leaves a tough tradeoff if the 2019-2020 NBA season were to resume.
Beyond the NBA, many other athletic competitions will have future conflicts with the new 2021 Olympics. The 2021 World Athletics Championships and World Aquatics Championship were supposed to be in July and August in 2021, and each will need to be rescheduled. Additionally, many Olympic qualifiers have not happened yet, meaning that they will be rescheduled, and the athletes that were rounding into their peak athletic form will have to reexamine their training regimen in anticipation of future qualifiers. The top amateur American boxer, Keyshawn Davis, was hoping to finish his amateur career at the 2020 Olympics and then turn pro afterward but is now faced with the prospect of another year as an amateur boxer if he wishes to compete at the 2021 Olympics. There are evident financial benefits of turning towards professional boxing, and Davis now faces the decision to either take that route of financial incentives or choose to fulfill his lifelong dream of winning at the Olympics. With the spread of COVID-19 continuing to grow in severity, I don’t think anybody knows just how big the magnitude of the disruption in the sports world will be and the impact on the individual athletes.