The Real Cost of Tokyo 2020


July 23, 2021 officially signifies the 2020 Tokyo Summer Olympic Games following an unprecedented year of postponement as a result of COVID-19.

The Japanese capital will stage most of the sporting events, marking the second time that Tokyo has hosted the Olympics since 1964. The major difference this time? COVID-19’s lingering impact.

The Main Event

This year, Tokyo's organizers for the Summer Olympics have decided against allowing spectators from overseas to enter Japan at the time of the Games. It seems like a relatively safe choice after what the nation has suffered so far: 8,800 deaths attributed to COVID-19, despite having controlled the virus well compared to most countries.

Although 80 percent of the Japanese public is opposed to holding the Olympics due to the pandemic, the decision to push forward with preparations isn’t exactly the option that Japanese residents are rooting for, either.

A Financial Burden

Historically, cities that bid to host the Olympics have done so in search of prestige and a renowned way to showcase their culture and achievements. The infrastructure built in preparation for the Olympics has oftentimes brought benefits to the locals of the host city, including renovated subways, highways and internet connectivity.

However, Department Chair of Graduate Programs and Research and professor of Economics at RIT Dubai — Dr. Sanjay Modak — pointed out that the negative toll of hosting the events outweighs the positive effects.

“[The Olympic Games] are in fact a huge loss-making machine that cities, even today, that hosted the Olympics 15 or 16 years ago are still trying to repay,” Modak explained.

“[The Olympic Games] are in fact a huge loss-making machine that cities, even today, that hosted the Olympics 15 or 16 years ago are still trying to repay.”

While the Olympics tend to yield higher tourist rates within the host country, these rates typically only last as long as the events do. Not only will this year’s lack of foreign ticket holders lower tourist rates, but Japan would also endure a loss of 2.4 trillion yen ($23 billion) as a consequence. Hence, the boost that Japan expects from the Olympics will be much smaller.

“[A stadium of just one nationality] is just going to take away a lot of the pizazz that the Olympic Games have," Modak said. "And if a Japanese competitor is not in contention, then who are they going to cheer for?”

Overall, Japan is spending $15.4 billion to organize the Games, therefore staging the most expensive Summer Olympics on record.

The country’s 20-year-long economic rut has made it so that this financial burden is not one that its economy can afford right now. As a result of stingy consumption spending and lagging domestic investment in the country, Japan’s Gross Domestic Product growth faces incredible difficulty.

“The economy has come to a shuddering stop,” Modak said. “It doesn’t grow, it doesn’t go back, it doesn’t go forward ... Japan’s economy has been anemic.”

Amidst a waning enthusiasm for the Olympics and a general decline in spectators over time, the impact of the Games this year appears to be far from rewarding.