Tokyo 2020: Who pays if COVID-19 forces cancellation?

A 12-month postponement once regarded as deeply improbable quickly became the only feasible plan to save the Tokyo Olympics. But a recent interview with Tokyo 2020 organizing committee president Yoshiro Mori has raised the possibility that the Games could be canceled for the first time since 1944 if the coronavirus outbreak is not under control by July 2021.

"In that case, the Olympics will be scrapped," Mori told Japan's Nikkan Sports newspaper. But the former Japanese prime minister remained confident that the games can go ahead next year.

"The Olympics would be much more valuable than any Olympics in the past if we could go ahead with it after winning this battle. We have to believe this, otherwise our hard work and efforts will not be rewarded."

That work had largely been completed before the COVID-19 pandemic forced the International Olympic Committee (IOC) to postpone the Games last month. Though postponement has its financial disadvantages, cancellation would mean a much heavier price, with most of the burden falling on the host nation.

"They've invested billions and billions of dollars. They've done all the heavy lifting. They‘ve built all the venues. They put all the technology and infrastructure together. So why give that all up?" former IOC marketing director Michael Payne said in an interview with DW. "For the athletes, which I think is where the IOC is probably most focused, that would mean a whole generation losing their Olympic chance. So I don't think any stone would be left unturned if they had to explore further postponement.

"But that's 15 months away. And we look at how fast things are developing with the virus, from lockdowns to opening up to when travel comes back, and I think it's way, way too soon to be deciding what the world situation is going to look like 15 months from now."

Danger in going it alone

Ultimately any decision to cancel would rest with the IOC, and the potential ramifications for Japan if their stance on cancellation clashed with that of the IOC, would go beyond the estimated €1 billion to refund tickets that have already been sold. Insurance is another tangled issue yet to be resolved. But in almost every sense, and for both the IOC and the host nation, postponement is a better option than cancellation.

"If the Japanese were to cancel unilaterally, they would be financially very, very exposed to the IOC, to all of the Olympic partners," Payne continued. "On one side of the equation, you have the business dynamics. On the other side of the equation, you have the international sporting dynamics. And I think the IOC will do everything to try and ensure that the athletes would be able to have their Olympic experience and that it wouldn't be lost for a complete generation."

Some athletes have already announced their retirements after the initial 12-month delay and doubtless an eight-year Olympic gap would deny many a chance to reach their pinnacle in their peak years. But both the IOC and Tokyo have wider financial and political concerns to consider were the worst to happen.

Estimates of the sunk costs for Japan vary wildly, from a low of €11.1 billion ($12 billion) to a high of €23 billion, with the IOC's contribution valued at about €740 million. There are also domestic sponsorship deals to consider (roughly €3 billion) while national and international TV rights packages are also significant for both parties.

Any takers?

In recent years, the IOC has struggled to attract bids to host such a complex and expensive event where any gain to be made is often in perception and soft power rather than cash.

"It's about the years following the games. All of the reasons that Japan stepped forward and wanted to host the Olympics. All of those benefits, which are benefits that go on for a decade or more. How do you redefine the concept of 'Made in Japan' and the whole branding benefits to Japan Inc? All of that will be lost," added Payne.

As is the case across the world, certainty is in short supply and unprecedented events have become the norm. Even so, 15 months ahead of the rescheduled event seems early to speculate, even when speculation is all that's available. 

While anything is possible, there is every chance that Mori's comments amount to little more than an experienced politician jockeying for position. On hearing his compatriot's views, Tokyo 2020 spokesman Masa Takaya emphasized that these were Mori's own beliefs and that "our mission is to deliver the Games next year."

Given what is at stake, everyone involved still hopes that can be the case. If it's not, there are only losers. Both sporting and financial.