How Profitable Is the Olympics for Hosting Countries?

Published July 23rd, 2021 - 09:00 GMT
Olympics in Japan
Due to the COVID19 restrictions, the 2020 Olympics will not feature audience participation. (Shutterstock)

Even after postponing the highly anticipated global event from the summer of 2020 to the summer of 2021, spikes of COVID19 and its variant are leaving a major toll on decisions regarding the Olympic Games Tokyo 2020.

Over the past few months, Japanese authorities have announced plans to hold the Tokyo 2020 Olympic Games as scheduled this summer. Yet, the unstable health situation in Japan and many other countries around the world, especially after the spread of the Delta variant, have put immense pressure on decision-makers that they decided to hold the games with no spectators.

While this decision is celebrated as a wise and responsible one, meant to protect millions of lives, the financial cost of these Olympic games has come under question.

Usually, countries compete to host popular international events in an attempt to support their economies. Hosting a popular sports event or a globally renowned festival can draw in thousands if not millions of visitors who are not only ready to attend the event but also take multiple tours around the country, book hotel stays, dine in restaurants, and shop in the country's finest markets.

Hosting major sports events can be quite profitable, particularly to countries with ready infrastructure and well-built stadiums and venues. But for countries that allocate lots of money to secure their bids to host such events, the situation can be a little too tricky.

While the London Olympic games in 2012 which cost more than $12 billion, helped the UK economy generate an instant $176 million and continued to make a major profit until the COVID-19 pandemic hit the world. The financial outcomes of the 2021 event continued to attract organizers of other, smaller, sports events, as they were impressed by the UK's performance in organizing the Olympics.

Unfortunately, this might not be the case for Tokyo. Business Insider has reported $75 million spent by Tokyo, so the city can host the 2020 Olympics. Another $150 million were spent by the city during its previous attempt to host the 2016 games, including consultants fees, event organizations, and other expenses. 

Even though Japan had initially planned to compensate for these expenses by the prospects of welcoming millions of tourists from the east and the west, the fact that the 2020 Olympics will not bring the country anyone but delegations of players might mean that Japan will lose even more money into holding the event and maintaining safety across the country in terms of security and health. 

Due to the delay in rolling out vaccine programs in Japan, the country has not been able to restore usual activities so far, which has led to the decision to hold the games, but only for people to watch remotely. This means that Japanese authorities will have to provide full services to more than 11,000 participants flocking from across the world, besides ensuring their health safety through continuous testing and maintaining social distancing, without having the leverage of welcoming tourists and sports enthusiasts whose spending could make up for millions of dollars put into setting this global event up.

Do you think Japan should have postponed the Olympics until after it gets most of its population vaccinated? Could not Japan plan its vaccination program ahead of the Tokyo 2020 games so the event helps support its pandemic-hit economy?

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