A study shows that the cost of hosting the Olympics is usually more than 172% of the original budget.
According to the British “Economist” magazine, the official Olympic merchandise store in Tokyo’s Odaiba Shopping Center near the Olympic Village hopes to earn money by selling various products to thousands of fans who come to watch the Olympics, from T-shirts to dolls A lot of profit, but currently it has reached 10% of expected sales.
It seems that the goal of the Olympics to bring broader benefits will still be out of reach, partly because of the new crown pandemic.
Economists have long believed that hosting the Olympics will only leave high debts, wasted infrastructure and heavy maintenance obligations, rather than stimulating consumption, prospering tourism and enhancing the status of the host country.
In a study published in 2016, American scholars Victor Matheson and Robert Paddy concluded that “in most cases, the Olympics are a bad deal for the host city.”
2021
This year’s Olympics provided more arguments for skeptics to support their views. Sohiro Toru of the investment bank Daiwa Securities said: “It is better not to host the Olympics this year.” He said that this is a common view of Japanese economists and non-economists.
The Economist pointed out that calculating the economic impact of major events such as the Olympics may be difficult.
The cost of the Olympics and the investment in the host city have caused controversy between organizers and critics, but one thing that is almost certain is that they inevitably affect budgets.
Alexander Poser, Bennett Flefberg, and Daniel Lun of Oxford University found that since 1960, the cost of each Olympic Games has been 172% higher than planned expenditures on average, as is the case in Tokyo.
In 2013, the Tokyo Olympics budget was around 7.5 billion U.S. dollars. By the end of 2019, the official budget had increased to 12.6 billion U.S. dollars, and the Japanese Audit Committee predicted that the actual cost would be twice that number. The anti-epidemic measures, including testing and other related measures, led to an additional $2.8 billion in hosting costs.
Exaggerated expectations
A 2017 study by the Tokyo government predicted that revenue would exceed the expected amount to offset costs, and estimated that the Olympics would generate 14 trillion yen (US$127 billion) in additional demand. Part of the increase in spending is due to the construction of new infrastructure, although such projects may crowd out investment in other more favorable areas.
Another benefit is that consumption during the Olympics is promoted, from tickets to food and beverages. But with the Olympics being held behind closed doors, the profits of the Tokyo Olympics were not as high as expected.
Only 950 people attended the opening ceremony (Al Jazeera)It is expected that most of the revenue will come from the growth of tourism and the use of transportation and other infrastructure after the Olympics. But Katsuhiro Miyamoto from Kansai University believes that these expectations have been exaggerated from the beginning, and the epidemic will disperse many of them.
Kiyoshi Takahede of the Nomura Research Institute believes that Japan will continue to benefit from the additional hotels it builds for this purpose, as the supply of guest rooms has become a constraint on the development of tourism in Japan before the pandemic. But there are also concerns that the dispute over hosting the Olympics during the pandemic will have a negative impact on Japan’s international status and reduce the likelihood of tourists visiting Japan. This concern explains why major sponsors such as Toyota refuse to sponsor the opening ceremony of the Olympics.
The magazine reported that the number of cities applying to host the Olympics has decreased in recent years. The Tokyo experience seems likely to dispel the will of more countries, especially in wealthy cities that do not require much infrastructure. Fighting for the right to host the Olympic Games may become a game that no city wants to participate in.
More about the 2020 Tokyo Olympics
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