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FACTBOX-Olympics-Money, money, money: the cost of Tokyo's pandemic-delayed Games

Wed 23rd June, 2021 12:00am
By Elaine Lies
    TOKYO, June 23 (Reuters) - Despite local opposition amid the
coronavirus pandemic, the Tokyo Olympic Games that were
postponed last year will get under way in exactly a month -
barring "Armageddon", as one International Olympic Committee
member said.
    But the delay so far has been expensive in various ways.
Here are some areas where costs have grown, and where income
that had been expected will not materialise.

    OLYMPIC COSTS
    Organisers said last December that the entire cost of
holding the Games would come to about $15.4 billion, including
$2.8 billion in costs for the unprecedented postponement from
2020. Since then, the projected bill for postponement has risen
to $3 billion.
    Ticket revenues are likely to be reduced from more than half
from an earlier expected 90 billion yen ($815 million), Tokyo
2020 CEO Toshiro Muto told a June 21 briefing where organisers
said spectators would be capped at half venue capacity, with an
upper limit of 10,000. Overseas spectators have been banned.
    Organisers initially sold some 4.48 million tickets and the
government had expected a tourism windfall. Some 840,000 tickets
have since been refunded, but the caps mean another decrease,
bringing the total number down to 2.72 million tickets.
 urn:newsml:reuters.com:*:nL2NO305H
     
    SPONSORS
    More than 60 Japanese companies together paid a record of
more than $3 billion to sponsor the Games. Sponsors paid another
$200 million to extend contracts after the Olympics were
postponed.
    That does not include partnerships with Japanese companies
Toyota, Bridgestone, and Panasonic, and others such as South
Korea's Samsung, which through a separate programme for top-tier
sponsors have separate deals with the International Olympic
Committee (IOC) worth hundreds of millions of dollars.
    
    INSURANCE
    Although the cancellation scenario is looking less likely by
the day, global insurers would face a hefty bill should that
happen, with estimates running to a loss of $2-$3 billion.
    The IOC takes out about $800 million of protection for each
Summer Games, which covers most of the roughly $1 billion
investment it makes in each host city.
    Local organisers in Tokyo will have taken out a further
policy, estimated at around $650 million.
    Analysts with the financial services firm Jefferies estimate
the insured cost of the 2020 Olympics at $2 billion, including
TV rights and sponsorship, plus $600 million for hospitality. 
    
    MEDIA
    Broadcaster NBCUniversal had reaped a record $1.25 billion
in U.S. national advertising spending for the Games before they
were postponed in 2020 and has spent the past year trying to get
sponsors to support them again this year, entertainment business
magazine Variety reported. 
    NBCUniversal's parent company Comcast  CMCSA.O  agreed to
pay $4.38 billion for U.S. media rights to four Olympics from
2014 to 2020, it added.
    Discovery Communications, the parent of television channel
Eurosport, has agreed to pay 1.3 billion euros ($1.4 billion) to
screen the Olympics from 2018 to 2024 across Europe.

    HIT TO THE ECONOMY
    The Olympics were originally expected to be a huge tourist
draw, but banning foreign spectators put paid to hopes of an
early recovery in inbound tourism, frozen since last year. 
    In 2019, Japan hosted 31.9 million foreign visitors, who
spent nearly 4.81 trillion yen ($44 bln). Numbers plunged 87% in
2020 to just 4.1 million, a 22-year low. 
    Though highly unlikely at this point, a full cancellation
would mean lost stimulus of 1.8 trillion yen, or 0.33% of GDP,
the Nomura Research Institute said in a recent report.
    But Nomura Research Institute executive economist Takahide
Kiuchi said that loss would pale in comparison to the economic
hit from emergency curbs if the Games turned into a
super-spreader event. 
    "If the (Olympic Games) trigger the spread of infections and
necessitates another emergency declaration, then the economic
loss would be much greater," Kiuchi said.
($1 = 110.4000 yen)

 (Reporting by Elaine Lies; Editing by Lincoln Feast.)
 ((elaine.lies@thomsonreuters.com; +81-3-4563-2748; Reuters
Messaging: elaine.lies@thomsonreuters.com))
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