Olympics Wrestle With Balance Sheet Amid Fan Ban

Andy Berg Headshot

While the 2020 Summer Olympics in Tokyo will be held without fans in attendance, the economic toll might be less than expected.

Any estimate from Business Insider back in February put the total cost of hosting the Olympics at over $26 billion, with the cost of the previous postponement at $2.8 billion. Ticket sales alone were expected to account for about $800,000 million in revenue.

Kenneth Shropshire, CEO of the Global Sport Institute and professor of global sport at Arizona State University, told Yahoo Finance that the construction costs for new venues are the primary reason for the astronomical cost of hosting the event.

β€œIt's hard to comprehend how you really get into the billions in terms of construction, but that's really what it is,” Shropshire told Yahoo Finance. β€œWhen you look at whatever football or baseball stadium you're familiar with locally, [they may cost] $1 billion, $1.5 billion, or $2 billion dollars, for the largest ones. And you're doing multiple venues for the 20+ Olympic sports.”

However, while a lot of sponsorship dollars have been lost as companies backed out due to a lack of fans, Tokyo may look to fill those new venues with other events.

β€œI think Tokyo will now bid for the Soccer World Cup, the Rugby World Cup, a Formula One race, the darts championship, or the world championships in track and field or swimming or gymnastics,” said Rick Burton, professor of sport management at Syracuse. β€œI mean, Tokyo now has the finest facilities in the world.”

Some of the revenue lost by banning fans at the events may also be recouped through broadcasting contracts.

β€œIt's a made-for-TV event,” Lisa Neirotti, associate professor of sport management at George Washington University, said. β€œYes, there's about 300,000 to 400,000 international fans that may have traveled to Japan and watched the games [live] at one point or another, but there's a billion that watch it on TV around the world. And the number one thing for the Olympic movement is that the broadcast of the Games goes on.”

Nerotti said that many of the costs associated with hosting a live even may be avoided.

β€œMany of the volunteers were there to help the spectators get to their seats, like, welcoming them into the stadium, showing them around,” Neirotti said. β€œSo without all those spectators, you don't need as many volunteers.”

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