Tokyo 2020 set to come in $1.8bn under budget

The Tokyo Organising Committee of the Olympic and Paralympic Games (Tokyo 2020) has today (Wednesday) announced that the postponed events are expected to come in $1.8bn (£1.35bn/€1.59bn) under budget, partly due to a reduction in costs caused by events being held behind closed doors.

Tokyo 2020 today detailed the current estimate of the overall budget of this year’s Games, which were delayed by a year due to COVID-19 and ended up mainly being held behind closed doors due to late escalating concerns over the state of the pandemic in the host country.

The budget incorporates the ‘OCOG’ budget, which is the responsibility of Tokyo 2020, and the ‘Other Entities’ budget of the Tokyo Metropolitan Government and the Government of Japan. It is estimated that total expenses will amount to $13.6bn, $1.8bn less than the $15.4bn estimated in version five of the budget in December 2020. Tokyo 2020 said this is through efforts to curb expenditures, including simplification, and a review of contracts associated with staging events with no spectators.

In addition, based on an agreement reached yesterday between Tokyo 2020, the Tokyo Metropolitan Government and the Government of Japan on the handling of Olympic and Paralympic Games expenses, Tokyo 2020 said it is expected that the Tokyo Metropolitan Government and the Government of Japan will be able to cover the additional costs incurred since the announcement of the version five budget – such as those resulting from the emergence of new mutant strains of COVID-19 and the decision to stage events without spectators – without additional budgetary measures.

In addition, based on the previous agreement that additional expenses for events occurring subsequent to the release of version five of the budget would be shared among the three parties, the Government of Japan will cover the additional expenses incurred for the Paralympic Games included in the Collaborative Project and the costs for countermeasures against COVID-19.

Separately, the Tokyo Metropolitan Government, as the governing authority of the host city, will cover costs relating to safety measures.

It is estimated that the expenditures of Tokyo 2020 will be $800m less than those foreseen in version five of the budget due to the above countermeasures to achieve a $200m cost reduction, and by the Collaborative Project of the Tokyo Metropolitan Government ($600m), while revenues will also be $800m less than previously budgeted owing to a decrease in ticket income.

As a result, Tokyo 2020 said revenue and expenditures were balanced at $5.9bn. As a result of the other expenses being borne by the Government of Japan and the Tokyo Metropolitan Government, even after dealing with the subsequent events including the decrease in income of the Organising Committee, the Government of Japan’s share of the overall costs is expected to be $300m below that specified in version five of the budget, and the Tokyo Metropolitan Government’s portion is expected to be $700m less.

Tokyo 2020 added: “This estimate is based on the current status of the execution of the budget, and it incorporates the cost of removal and restoration of temporary structures at competition venues and the review of contracts based on the number of spectators.

“Tokyo 2020 will continue to make every effort to reduce costs and secure revenues, and will further clarify all details of the Games’ expenses.”

Today’s announcement comes after it was reported earlier this month that organisers were expecting the cost of the events to come in at least ¥150bn (£999.4m/€1.17bn/$1.32bn) less than projected after they were mostly held behind closed doors due to COVID-19.

Japanese news agency Kyodo, citing officials with knowledge of the matter, said organisers were believed to be confident that the final price tag, divided between the organising committee, and the central and Tokyo metropolitan governments, would come in at around the ¥1.5tn mark.

Heading into the Olympics, Hokkaido and Fukushima became the latest Japanese prefectures to ban fan attendance at the Games. The latest decisions came after it was earlier announced that fans would not be able to attend the majority of venues in Tokyo after a state of emergency was declared in the Japanese capital.

Olympics Minister Tamayo Marukawa confirmed that the escalating COVID-19 situation in Tokyo meant that no spectators would be permitted in the capital and the wider metropolitan area during the Olympics, which ran from July 23 to August 8. Only minimal fan attendance was seen during the Games.

The Games was initially estimated to cost ¥734bn when Tokyo first made its bid for the event back in 2013.

Image: Dick Thomas Johnson/CC BY 2.0/Edited for size