On Wednesday, local media in Japan reported ministers in Tokyo were mulling a ban on foreign spectators for the upcoming Olympic and Paralympic Games, which are due to take place on July 23, after the delay of a year. The report was published shortly before the new head of Tokyo’s Olympic organizing committee, Seiko Hashimoto, met with Thomas Bach, the head of the International Olympic Committee.
“If the situation is tough, and [having foreign fans] would make the [Japanese] consumers concerned, that is a situation we need to avoid from happening,” Hashimoto said when questioned by reporters after the meeting.
Hashimoto, who replaced former Prime Minister Yoshiro Mori as organizing committee head in February when the latter was ousted for sexist remarks, said she wants a decision on whether foreign fans will be allowed by the end of the month.
Delaying the Tokyo 2020 Olympics has already cost Olympic organizers an additional $2.8 billion, making the Tokyo Summer Games the most over-budget on record. The loss of ticket sales and tourism dollars from banning overseas spectators would leave the Tokyo organizing committee’s books even deeper in the red.
Subscribe to Eastworld for weekly insight on what’s dominating business in Asia, delivered free to your inbox.
According to Katsuhiro Miyamoto, an honorary economics professor at Kansai University, Japan’s economy will suffer a $22 billion shortfall if spectators are prohibited from the Games entirely. Even halving the number of fans in attendance would reduce economic contributions by $13 billion, Miyamoto said in a report released in January.
The shortfall includes a 90% decline—equal to roughly $3.7 billion—in consumer and corporate spending related directly to the Games.
So far, Hashimoto has suggested the Olympics will not be an entirely closed-doors affair, tellinglocal media that other sporting events have managed to host fans to some degree. Tokyo 2021 might cap the number of attendees, however.
In December, organizers said 18% of domestic ticket holders for the Olympics had requested a refund, after the end of a three-week window for returns. That means fans in Japan still hold 3.6 million tickets for the Games.
The Tokyo 2020 Olympics, which were initially scheduled for July of last year but were postponed owing to the pandemic, are already the most expensive Summer Games on record. The Tokyo organizing committee has budgeted $15.4 billion for the event, up from an initial estimate of $7.3 billion when Japan made its Olympic bid in 2013.
The extra costs of delaying the Games were mostly due to the prolonged employment of support staff and the added costs of incorporating COVID-19 safety measures. Countermeasures include temperature checks and hand-sanitizing stations as well as less tangible features, such as designing new logistics for attendees.
In February, the organizing committee released several “playbooks” dictating special requirements for athletes, support staff, press, and others attending the Games. The playbooks outline what precautions attendees must adhere to in the weeks before flying to Tokyo—such as recording their temperature daily—and what restrictions they must abide by once in Japan—such as not cheering or chanting during competitions.
The inherent risk of hosting such a large-scale event in the midst of a global pandemic has made the Olympics less appealing to Japan’s citizens. According to a January poll by Kyodo News, 80% of residents would rather see the Games canceled or further delayed. Miyamoto predicts declining interest in the Games will limit the event’s “stimulus effects” on household spending—i.e., additional spending such as on dining out and travel spurred by the thrill of the Games—to the tune of a $2.7 billion shortfall in consumption.
Canceling the Games completely, however, could strike up to $43 billion from Tokyo’s books, Miyamoto says. What’s more, cancellation would mean the International Olympic Committee would lose roughly $1 billion in broadcast rights sales, which account for 90% of the IOC’s revenue.
