Coronavirus Olympics Cancellation Could Be 'Financial Shock' For NBC and Other Broadcasters, Says Media Analyst

Postponing the Olympic Games because of the coronavirus outbreak could cost broadcasters and commercial partners millions of dollars in revenues, analysts have warned.

The 2020 Olympics are scheduled to be held in Tokyo between July 24 and August 9, but their fate appears increasingly up in the air as Japan battles to contain the virus.

With the exception of the two world wars, the Olympics have never been canceled since they began in their modern guise in 1896.

Should the Tokyo Olympics be postponed or called off altogether, organizers would face a hefty financial hit. According to official figures, Japan has committed 1.45 trillion yen ($13.4 billion) to organizing the Olympics, with $277 million alone spent on building a new Olympic Stadium in Tokyo.

The picture for broadcasters and sponsors would be similarly bleak.

"Broadcasters showing the Olympics might also be in for a financial shock [if the Games are canceled]," Conrad Wiacek, head of analysis and consulting at GlobalData's sports media rights intelligence service Sportcal, said in a note circulated to media on Wednesday.

"It should be stressed that the overall impact on the global sports industry should not be underestimated."

As is the case for the majority of sporting events, the lion's share of income the International Olympic Committee (IOC) receives during a four-year Olympic cycle comes from selling broadcasting rights.

According to the Associated Press, approximately 73 percent of the IOC's $5.7 billion income in the current four-year cycle derives from TV revenue.

NBC is responsible for approximately 50 percent of the figure. The Comcast-owned network paid a total of $4.38 billion for the rights to the next four Olympics—winter and summer—before investing a further $7.7 billion three years later to purchase the rights to another six editions of the Games.

A loss of revenue isn't a source of concern for Comcast as the company is insured against such an eventuality.

Tokyo 2020 Olympic Games
The logo for the Tokyo 2020 Olympic Games is seen in Tokyo on February 15. Charly Triballeau/AFP/Getty

However, chairman and chief executive Brian Roberts admitted canceling the Olympics would cost the company the ad-driven profit, which stood at approximately $250 million for the Rio Olympics four years ago.

"We try to anticipate for big events what might happen so that we're protected there, and we also have insurance for any expenses we make," Roberts said at the Morgan Stanley Investor Conference on Tuesday.

"So there should be no losses should there not be an Olympics. There wouldn't be a profit this year. But again, we're optimistic the Olympics are going to happen. [...] I can hope and imagine that that [the Olympics] would happen this summer. In the event that it didn't, we have insurance and we have contractual protections."

According to Sportcal data, Tokyo Organising Committee has already brought on board over 70 local sponsorship partners based in Japan, which have committed over $900 million to the Games.

NBC, meanwhile, has sold over $1.25 billion worth of advertising ahead of the 2020 Olympics, setting a new Olympic record.

Dan Lovinger, NBC Sports Group executive vice president of sales, said the broadcaster had sold "nearly 90% of our Tokyo Olympic inventory and the vast majority of our tentpole sponsorships have been sold."

On Tuesday, IOC President Thomas Bach urged athletes to "continue their preparation as usual" and insisted there was nothing to suggest the Games would not go ahead as planned.

However, the so-called "Home City Contract" the Olympics governing body, the Japanese Olympic Committee and the city of Tokyo signed in 2013 stipulates that the IOC has plenty of grounds to cancel the Games, should it see fit to proceed.

Japan's Olympic minister Seiko Hashimoto referred to the 81-page document on Tuesday, when she suggested the Games could be postponed until the end of the year .

"The IOC has the right to cancel the games only if they are not held during 2020," Hashimoto told parliament.

"This can be interpreted to mean the games can be postponed as long as they are held during the calendar year. We are doing all we can to ensure that the games go ahead as planned."

Over 3,000 people have died since the outbreak of coronavirus began in Wuhan, a city located in China's central Hubei province, late last year.

As this chart provided by Statista shows, the virus has spread to over 70 countries across the world, with 93,000 cases confirmed as of Wednesday.

Tokyo 2020, Coronavirus, Statista
Spread of the COVID-19 virus across the world as of March 4. Statista

Soccer matches in Italy, Japan and South Korea have been called off or played behind closed doors since the virus has spread across the world.

The Chinese Formula 1 Grand Prix has been canceled as have a number of Olympic qualifying tournaments and test events.

All the Olympic broadcasters would be consulted by the IOC and the organizers over a possible postponement.

When contacted by Newsweek over contingency plans for a potential postponement, a spokesperson for the BBC said the broadcaster would not comment on hypothetical scenarios, while Roberts remains optimistic the Games will go ahead.

He cited the example of Comcast theme park in Beijing, where the company "shut down" 13,000 construction workers for several weeks at the turn of the year because of the coronavirus outbreak.

Work has since resumed and Roberts is hopeful the same scenario will be replicated in Japan.

"I'm looking forward to being there [in Tokyo]," he added.

"I think as they take regional areas, when there's a problem, they try to focus the measures. Then several weeks later, hopefully, business begins to become more normalized. [...] Anything could change of course. That's what we hope will happen in Tokyo."