Hosts of the 2020 Olympics Japan are likely to lose about 1.35 trillion yen (about 12.9billion dollars) should the event be cancelled due to the ravaging effect of Coronavirus it has been revealed.
At the end of 2019, organisers estimated the total cost of the Games at around 1.35 trillion yen.
That is divided between the city of Tokyo, which is paying 597 billion yen, the Japanese organising committee, which contributes 603 billion yen and the central government, which is paying 150 billion yen.
But the actual costs for the country have been hotly debated, with a widely publicised audit report estimating national government spending from the bid in 2013 until 2018 at 1.06 trillion yen, nearly 10 times the budget.
Japanese businesses have also poured money into the event in sponsorships, paying out a record 348 billion yen.
And that figure doesn’t include the partnerships signed between major companies and the International Olympic Committee for rights to sponsor several Games. Among those are giants including Japan’s Toyota, Bridgestone and Panasonic.
According to analysts at Capital Economics, one key factor to consider in terms of how a cancellation might hit Japan’s economy is that most of the spending has already happened.
Economists at research firm Nomura already predict a 0.7-percent contraction in GDP for the 2020 calendar year, but warn that could be up to 1.5 percent if the Games are cancelled.
Takashi Miwa, an economist at the firm, told AFP the main impact would be on domestic spending, because a cancellation of the Games “would badly affect Japanese consumer confidence”.
So far 4.5 million tickets have been sold in Japan, with around 7.8 million expected to be sold overall, 20 to 30 percent of them internationally.
Japan’s tourism ministry in 2018 projected around 600 000 foreign spectators would come for the Olympics. Organisers are tinkering with the idea of postponing the Games to later in the year as worst case scenario.
Olympics minister Seiko Hashimoto has said Japan’s agreement with the International Olympic Committee to host the 2020 games could be deferred until the winter.
“The contract calls for the games to be held within 2020. That could be interpreted as allowing a postponement,” the minister said in response to a question in parliament.