Tussle begins over extra costs of postponed Games

31-Mar-2020 Intellasia | JapanNews | 6:02 AM Print This Post

The opening ceremony for the postponed Tokyo Olympics could take place on July 23, 2021, according to sources close to the Games, a date that would help lengthen the time needed to prepare.

Since the schedule for the tournament is almost the same as before, the original plan can likely be used with minor changes. However, a thorough review of preparations is inevitable, and a tug-of-war has begun between the Tokyo metropolitan government and the central government over substantial additional costs, such as securing new venues, higher labour costs, and storing materials and equipment.

The estimated cost of hosting the Games was JPY 1.35 trillion in December, with the organising committee paying JPY 603 billion, the Tokyo metropolitan government JPY 597 billion and the central government JPY 150 billion. The organising committee plans to make a profit through sponsorship and ticket sales.

If there is a shortage of funds, the metropolitan government will bear the additional cost and the central government will compensate it based on pledges made when bidding for the Games. Although the amount of extra expense will vary depending on the length of the postponement and revenue from sponsors, sources in the metropolitan government and the organising committee predicted it would cost several hundred billion yen.

“The postponement is a first in the history of the Olympics. I want the country to shoulder a reasonable burden,” a senior metropolitan government source said. At a press conference on Friday, however, Tokyo Olympic and Paralympic minister Seiko Hashimoto said only, “The organising committee and the Tokyo metropolitan government will discuss the matter.”

Expenditures related to the postponement are likely to increase because of the cost of securing venues. Rental fees of JPY 53 billion were initially expected, but now cancellation fees and new charges for bookings are predicted.

In the case of Makuhari Messe in Chiba the venue for seven sports, including wrestling the organising committee planned to rent the stadium for about JPY 3.5 billion between April and September. The Chiba prefectural government, which owns part of the facility, began discussions with the organising committee on Friday on cancellation fees and other matters.

A total of 370 events take place during the same period each year, and many companies plan to use the facilities in 2021. Chiba Gov. Kensaku Morita said, “This year, we asked [prospective users] to go elsewhere, but next year that won’t be sufficient,” hinting at the difficulty of rebooking.

The organising committee was established six years ago with 44 members, and had 3,585 members as of March 1. About 30 percent of the employees are contract workers, who will receive a total of about JPY 4.7 billion this fiscal year. The postponement will undoubtedly result in higher labour costs than initially planned.

The handling of materials and equipment will also be an issue. The 3-metre-tall fences that will surround the stadiums to help prevent terrorism will be about 100 kilometers long in total. They will be kept in warehouses around the country.

Compensation may also be requested for the tens of thousands of hotel rooms temporarily reserved for tournament officials, the about 2,000 buses for athletes, and the work of security companies who secured more than 10,000 staff.

The organising committee had expected to earn JPY 348 billion in sponsorship fees from domestic companies, including those paid by companies that sign contracts just before the Games. Deals with many companies are due to expire in December, and it is unclear whether they will extend contracts after they expire as the economic situation deteriorates due to the new coronavirus.



Category: Japan

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