top of page

The economics of the 2021 Olympics

Writer's picture: Samuel BrownSamuel Brown



This year's Olympic Games were unusual. This was the first time since WW2 where the Olympics have not taken place every 4 years, and the first ever to be postponed. This was also the first Olympic Games with no spectators due to the Covid-19 pandemic, which, along with this being the most expensive Olympic Games ever, raised economic concerns in Japan from the public and sponsors of the Games.


Hosting the Olympics is very expensive, and with the Games being postponed a year, the cost increased by $2.8 Billion, raising the total estimated cost to be roughly $15.4 billion. This cost is over double the initial estimated cost ($7.3Bn) back in 2013 when Tokyo was awarded the Olympics. Usually, some of the cost would be covered by domestic and international spectators, but on the 8th of July, Japan announced a state of emergency in Tokyo due to concerns about Covid-19 until the 22nd of August. This state of emergency has other economic costs associated with it. For starters, Japan will be missing out on an expected 40m international tourists, which would have generated revenue for local businesses, many of which had invested in their business in anticipation for the large inflow of tourists which usually come with hosting an Olympic Games. Major sponsors responded to the concerns with the Games in different ways. Toyota have an eight-year deal worth nearly $1Bn to be a worldwide Olympic sponsor and made the decision not to run TV commercials related to the Games.





It’s not all bad news for the Japanese economy though; some other industries saw the benefits of the Summer Games being held in Tokyo. With eight venues being built, including a 68,000-seat stadium and 25 other facilities being renovated costing a total of about $3 billion, as well as the athletes village which will be converted into apartments costing roughly $490 million, the construction industry was one of the biggest economic beneficiaries of the Games this year. The facilities will also be used in the future to hold sporting events, which in the long run will further bring in revenue, with both providing new jobs in the area, which should help Japan’s recovery from the current pandemic. Other industries also saw a benefit, for example a surge in demand for TVs across Japan was observed. Japanese electronics retailers Nojima Corp., Bic Camera Inc. and Yodobashi Camera Co. all announced an increase in TV sales in the run up to the Olympics, with Yodobashi Camera Co. benefitting the most, with sales this year from January to June being 2-2.5 times higher than the previous year, and the best-selling product at all 3 companies being 65-inch OLED TVs.


Another issue relating to the 2021 Olympics is the cost to public health in Japan. During the Olympics, daily Covid-19 cases tripled to over 15,000. This spike in cases has led to the state of emergency to be extended in Tokyo until September 12. This doesn’t come as a surprise, in a newspaper poll by The Asahi Shimbun, one of the largest newspapers in Japan, 55% were opposed to the Olympics going ahead 68% expressed doubt about the Olympic organisers' ability to control the spread of Covid-19.





This year Japan was faced with a sudden new challenge and had major decisions to make regarding theGames. The public and sponsoring organisations alike were sceptical about the decision to go ahead withthe Games; there is a lot to point out on why going ahead with the Olympics this year was a bad decision,namely the economic and health costs to the public. However, there are also benefits which are hard tomeasure economically, such as the success of Team Japan achieving 3 rd place and new sporting venuesleading to the encouragement and hopefully increased participation in sports in Japan. Overall whether the2021 Olympics were a success or not is debatable. There are not yet figures on if the Olympics made aprofit or loss, but unfortunately for Japan, it is unlikely to have made a profit. Japan’s economy has been ina period of economic stagnation since the 90’s, this years Olympics were an opportunity to bring neweconomic activity to the country, however with the pandemic coinciding with the Olympics this has notbeen the case and due to the increase in Covid-19 cases in the country, its already slow recovery from thepandemic may have been hindered even more by the Olympics.


0 comments

Recent Posts

See All

Comments


LANCASTER UNIVERSITY

ECONOMICS SOCIETY
LUES logo, no backround.png
papyrus.jpg

HOPELINEUK: 0800 068 4141

9am - Midnight every day of the year

  • LinkedIn
  • Facebook
  • Instagram

Designed by George Elliott

& Álvaro de Frutos

bottom of page