Will 2020 Olympics Go Ahead? Japan Faces Multibillion-Dollar Loss If Games Are Canceled

The International Olympic Committee (IOC) and Tokyo 2020 organizers risk losing north of $15 billion should the Olympic Games being called off again, as corporate sponsors are getting cold feet about being associated with the event.

In March 2020, the IOC and the Tokyo 2020 organizers postponed the Games by 12 months because of the COVID pandemic.

With the exception of the two world wars, the Olympics have never been canceled since they began in their modern guise in 1896 and the IOC remains adamant the Games will go ahead this summer.

Public opposition in Japan, however, has hardened over the past year. Recent polls have shown that as many as 62 percent of Japanese people oppose the idea of holding the Games this summer, according to a Nikkei poll.

The figure is down from 83 percent a month ago, but remains significant.

The public condemnation the IOC could attract should it push ahead with the games, could pale in comparison to the financial cost of canceling the Games.

Official figures show Japan has invested $15.4 billion into hosting the Olympics, of which some $8.6 billion come from Japanese taxpayers.

The budget initially stood at $13.4 billion, but the cost has surpassed that threshold.

Economists estimate Japan faces a $16 billion loss should the Games be canceled.

In May, Takahide Kiuchi, a former Bank of Japan board member and currently the executive economist at the Nomura Research Institute, warned the financial impact, should the Games go ahead, could be far more significant.

"If the [Olympics] trigger the spread of infections and necessitate another emergency declaration, then the economic loss would be much greater than cancellation," he wrote in a report, according to Reuters.

Nomura estimated Japan's first nationwide state of emergency last year cost the country's economy in the region of 6.4 trillion yen (around $58.4 billion). The financial impact was only worsened by the subsequent states of emergency Japan has imposed.

"These calculations suggest that the decision of whether to hold or cancel the Games should be made from the perspective of infection risk rather than economic loss," Kiuchi added.

The decision to ban foreign spectators from attending has already cost organizers approximately $800 million in forfeited ticket sales. Should the Games be canceled, organizers would have to refund approximately $3.3 billion to Japanese corporate sponsors alone.

On Thursday, the Financial Times reported the Games' corporate sponsors have hired consultants, which include Kantar, Intage and Macromill, to determine whether being associated with the Olympics could have a negative impact on their brands.

Japanese companies in particular are wary of tying their colors to the mast of an event that currently faces overwhelming public opposition.

Soft drinks company Meiji Holdings acknowledged it was investigating the impact sponsoring the Olympics would have on its brand, but told the Financial Times its current Games-related ads were not based on the findings of the research.

Sportswear giant Asics, which like Meiji Holdings is one of Tokyo 2020's so-called gold partner corporate sponsors, has recently run TV ads featuring athletes expected to compete in Tokyo. The Olympic logo, however, appeared only at the end of the commercial.

Olympic rings at Tokyo 2020
The Olympic rings are seen at the Odaiba waterfront in Tokyo on June 3. Kazuhiro Nogi/AFP/Getty Images

Organizers could come under increasing pressure from sponsors, but the IOC appears to have retained the support of one of its key allies with NBC confirming it was pressing ahead with preparations for 7,000 hours of Olympic coverage across its eight networks and digital platforms.

Approximately 75 percent of the IOC's $5.7 billion income in the current four-year cycle derives from TV revenue, with the Comcast-owned network responsible for approximately 50 percent of it.

NBC 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.

In March 2020, Dan Lovinger, NBC Sports Group executive vice president of advertising sales, said the broadcaster had already sold "nearly 90 percent of our Tokyo Olympic inventory and the vast majority of our tentpole sponsorships have been sold."

On Friday June 4, Japanese Olympic Committee executive board member Kaori Yamaguchi claimed the "Olympic Games have lost meaning" and questioned the IOC's resolve to hold the event this summer.

"At the time of the bid, the IOC said that public opinion is important, but now it is clear that even if it concerns the IOC, it has no impact on its decisions," she wrote in a scathing editorial published by Kyodo News.

"The Games have already lost meaning and are being held just for the sake of them. I believe we have already missed the opportunity to cancel."

As of Thursday morning, Japan had reported just over 768,000 cases of the coronavirus and more than 13,800 deaths, according to Johns Hopkins University.

While the death tally from coronavirus is relatively contained compared to other nations, Japan has been hampered by a slow vaccine rollout. About 4 percent of adults in the country have been fully vaccinated.

As this graphic provided by Statista shows, Japan lags well behind other countries in the race to vaccinate its entire population.

Race towards vaccination
A graphic illustrating the race towards full vaccination in countries across the world. Statista