Authors: Aces Low Ying Xuan and Chua Jun Jie, James
Research Head: Sasthaa Gingee Babu (Uday)
The Japan team came out of the Tokyo 2020 Olympics with 58 medals, including 27 gold medals, breaking their previous record of 16 gold medals in the 2004 Athens Games (Murakami, 2021). However, outside the Olympic bubble, Tokyo was facing yet another state of emergency (“Japan Announces Covid-19,” 2021), with Covid-19 cases climbing daily and the healthcare system pushed to its limits. This article will seek to unpack the impacts of the Tokyo Olympics on Japan, and uncover whether this Olympics was an anomaly, or whether it aligned with past Olympic trends.
Looking back at 21st century Summer Olympics
Before analysing the Tokyo 2020 Olympics, we first unpack the history of Summer Olympics’ impacts on their host countries.
When talking about the Olympics, one highly discussed topic is “how much did they spend this time?”. In our analysis, all financial figures mentioned will only be Olympics sports-related costs. As viewed from Figure 1.1, Olympics hosting cost has been increasing over the years, with the past 2 Summer Games before Tokyo 2020 reaching over $10 billion in sports-related costs alone. Figure 1.2 reflects a consistent record of cost overrun, highlighting the high risk of incurring cost overruns when hosting the Games.
Figure 1.1: Olympics Sports Related Costs (2000-2016)
Source: Flyvbjerg, Budzier & Lunn
Figure 1.2: Olympics Cost Overruns in Real Terms (2000-2016)
Source: Flyvbjerg, Budzier & Lunn
In terms of social impacts, effects were more divergent and largely dependent on the planning and execution of the host nations. The Beijing 2008 and London 2012 Games generated a strong sense of solidarity and national pride for their respective citizens (Brownell, 2012; Konstantaki, 2012). On the other hand, Rio 2016 left long-lasting negative effects on its society and economy. Nearly 77,000 citizens were evicted from their homes for the construction of Olympic venues and their divergence of budget led to the government being unable to pay civil servants their wages (McBride, 2018).
In addition, Rio also saw public calls to delay the Games due to the then public health emergency – spread of the Zika Virus (Stone, 2016). Months prior to the Olympics, Rio recorded the most number of cases in Brazil leading to considerable calls for postponement. Ultimately, Rio went ahead with the original schedule, and fortunately, no visitors or athletes were infected (Tavernise, 2016).
Hosting the Olympics is expensive but why does Tokyo still want to host it?
By 2019, anticipation was running high with all eyes on the upcoming Tokyo 2020 Olympic Games and Japan was busy preparing for its predicted tourism boom. Then, Covid-19 hit. Initially forecasted to cost $7.3 billion, estimation was subsequently revised to $12.6 billion, with total real spending ultimately ballooning to an astonishing $22 billion (McCarthy, 2021).
We will first explore Tokyo 2020’s usual hosting costs before analysing the additional costs due to the postponement. The 2020 Games hosted 33 sports, many of them requiring specialised facilities (Demsas, 2021). It is expected of host cities to divert funding to building and refurbishing sports facilities in preparation for the Games. Tokyo’s single biggest receipt was the $3 billion allocated to the construction of eight new facilities, including the $1.43 billion National Stadium, and renovation of 25 venues (Cervantes, 2021). It is still uncertain whether the newly built facilities will continue to remain in good use. However, it remains a fact that maintenance is costly and some previous host countries have chosen to leave facilities unused, including Rio’s athlete village and Atlanta’s Herndon Stadium, both abandoned (Lam, 2021). With Covid-19 lingering and sports having to adapt to the new normal, we can expect certain facilities built for Tokyo 2020 to be greatly underutilised in the foreseeable future.
The postponement of the Games also dug Japan into a deeper hole. Economic costs are clear ‒ $2.8 billion, with two-thirds funded by taxpayers (McCarthy, 2021). Tokyo also forfeited $800 million in ticket revenue (Cervantes, 2021) and will not be able to enjoy the usual tourist boom due to the ban of spectators. This was a great setback to local businesses who were preparing for the tourist influx, including new and refurbished hotels, retailers and attractions, who risk going bankrupt (Mariano, 2021).
Despite the hefty cost, Japan placed their bets on the Games revitalising its tourism and economy. Businesses that manage to survive the pandemic will still be able to attract tourists once travel resumes. Hosting the Games has also directly boosted the economy and provided jobs especially in construction and service providers for the Games with an estimated $18 billion increase in demand (“The Economic Effects,” 2017). This could have created a multiplier effect as unemployment decreases and incomes increase, causing a rise in domestic consumption, if not for Covid-19. Japan also benefited from the rejuvenation of infrastructure with $90 million spent on improving the surrounding roads and infrastructure of the athletes’ village (Hornyak, 2021), and reconfiguration of train stations to be disabled-friendly (Duignan, 2021). Previously, Beijing similarly spent $22.5 billion constructing roads and public transport, and Sochi spent $44.3 billion on non-sports infrastructure (Wills, 2021), allowing locals to benefit from the refresh of infrastructure in the long-run.
Was Tokyo 2020 really an anomaly compared to past Olympic Games?
Economically, it might seem that Tokyo’s cost and cost overrun figures do fall in line with past trends as seen in Figures 1.1 and 1.2, and that it should not be of much concern.
However, delving deeper and viewing the Tokyo 2020 Olympics in the context of the pandemic, the numbers and statistics do show a different story. Early this year, Japan saw an economic contraction of 5.1% (Kageyama, 2021), and the government was struggling to disseminate the promised $270 billion Covid-19 relief funding (Takami, 2021). Given the already tight financial situation, stretched by Covid-19 related spending, the budget allocated towards the Olympics added a considerable burden towards the Japanese economy and its financial status.
Comparing Japan’s circumstances to the Rio 2016 Olympics where they faced the threat of the Zika Virus, it must be noted that tangible precautions including staying in air-conditioned rooms, spraying of insect repellent and insecticide were effective measures in preventing the spread. However, with the Delta variant, the Tokyo Olympics contributed significantly to the rise in Covid-19 cases within Tokyo and Japan (Gunia & Shibata, 2021). Not only did athletes contract the virus (Stump & Reuters, 2021), locals also gathered in parks and bars to watch the Olympics together, deteriorating the effectiveness of government safety measures (O’Shea & Maslow, 2021). The spike in cases also placed pressure on Japan’s healthcare system. With 50% of hospital beds occupied in Tokyo, the government has advised other non-high-risk patients to self-quarantine at home (Kageyama, 2021). The dire consequences the Games had on Japan’s Covid-19 situation has changed the direction of its recovery roadmap entirely, pushing their healthcare system to the brink and further lockdowns could signal worsening economic prospects for local businesses (Ray, 2021).
Instead of recreating the glory, national pride and legacy the Tokyo 1964 Olympics received, the Tokyo 2020 Games took a vastly different direction. Despite the initial protests from locals and domestic firms to delay or cancel the games, the government still went ahead with hosting the games, possibly in hopes of earning back some costs spent or boosting domestic morale in the tough times. Yet, when taking into account the economic, social and healthcare consequences during and after the Games, it is safe to agree that costs from this Olympics far outweighs that of past Games.
 Budget allocated to building of city infrastructure (like roads, airports, hotels), IT investment, environmental costs and all other non-sports related costs are NOT included in the financial figures.
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