Japan Already Had An Olympic Bill Of $12 Billion, Now A Delay May Cost An Additional $6 Billion

The one-year delay in the Olympics due to coronavirus has undone Japan's careful planning in the previous years. The organisers had to go through headaches for small businesses, hotels and even pro baseball teams, compounding a $12 billion price tag.

For the first time in the competition's 124-year history, an edition was postponed during a time of peace. New dates have yet to be set, leaving sponsors and businesses uncertain and scrambling.

For Japan, this delay will most quickly cost 641 billion yen ($6 billion), according to Katsuhiro Miyamoto, an emeritus professor of economics at Kansai University who studies the economic impact of the Olympics.

He reckons the bulk of that, 423 billion yen, will be from actual costs - things like venue maintenance, reprinting of marketing materials and hiring new volunteers - with the remainder coming from a broader blow to the economy.

That's on top of the $12 billion Japan spent in the run-up.

The head of the International Olympics Committee has said the delay will mean additional costs for everyone.

For Grapestone Co Ltd, which sells banana-shaped sponge cakes filled with custard, the delay has been a disaster for the Olympic-themed "Tokyo Banana" confection it spent a year developing.

Grapestone's sales had been falling since February, when the coronavirus started to hit tourism. Now vendors are saying they don't want cakes decorated with the 2020 Games logo.

"We've never seen such a dramatic fall in sales," said spokeswoman Yukiko Ohno, without detailing the decline. "Since the Olympics were delayed, we think a lot fewer of our customers feel they have to have the cakes right now."

The company has cut back production at its plants in nearby Saitama. It also makes cherry blossom- and panda-themed cakes, but Ohno said the Olympics one is made with rice flour, to give tourists a "taste of Japan".

Japanese sponsors, who have paid a record $3 billion to be associated with the Games, have complained privately about the uncertainty of the delay. Unlike global Olympic sponsors, most of the Japanese firms have signed up just for a year.

"We need to negotiate whether our current contract can be extended or needs to be re-signed with additional costs," said a representative of one sponsor.

"It's not even clear whether we can continue to use the rights or not."

Venues pose a particular problem for organisers. Tokyo Big Sight, a colossal exhibition hall on the eastern side of the city, was booked as the Olympics media centre to hold thousands of journalists.

It's unclear whether Big Sight, which is owned by the Tokyo government, will be available next year given that bookings are taken far in advance. The venue has already entered into contracts for 50 bookings in the year starting in April and is in talks for 200 more, said spokeswoman Mayumi Inoue.

She said it wasn't possible to make room for the Olympics if other events were going on. "It has to be one or the other."

Jingu Baseball Stadium, home to Tokyo Yakult Swallows professional team, was slated to be used to store equipment by organisers during the Olympics, a Swallows spokeswoman said.

The team had planned to play at the Tokyo Dome, home of crosstown rivals the Yomiuri Giants, between July and early September, but is now checking whether it still needs to, the spokeswoman said.

Another area team, the Yokohama DeNA Baystars, arranged to play its home games elsewhere - including in Niigata, some 350 km (215 miles) away - because its ground was to be used for Olympics baseball. Baystars spokesman Yasuhiro Kawamura said the team was working with the baseball association on its schedule.

Public broadcaster NHK and private broadcaster Fuji Television Network both said they cancelled programmes due to the postponement. Three other private broadcasters did not respond to a request for comment about programming changes.

The Olympic village, which is designed to house more than 10,000 athletes, could prove one of the biggest headaches. It is due to be converted into luxury apartments, many of which are already sold. Tenants are supposed to move in by 2023.

One woman who bought a flat in the village with her husband said she was unsure about the move-in date.

"I still haven't figured out what's going to happen," she said. "It would be troubling if the Olympic Village were used over an extended time period without our consent."

Sales of the flats and showroom tours have been suspended until further notice, Mitsui Fudosan Residential, which is leading the real estate project, said on Monday.

Around 4.5 million tickets have been sold for the Olympics, and another 970,000 for the Paralympic Games. Organisers say they haven't decided yet how to handle tickets, although Japanese media have reported the tickets would be valid for the same events next year.

Tokyo organisers have about 3,500 people on staff, with a number of those seconded from the government or sponsoring companies.

"Many of the temporary staff are wanting to get back to their own organisations so this will affect their motivation," said one Olympics insider about the delay.

The postponement will heap more pain on hotels, which have been battered by coronavirus.

"The drop in sales we're seeing is brutal," said Shigeki Kitahara, president of the Ryokan and Hotel Association, who owns a traditional ryokan hotel himself.

With bookings often made far in advance, it is difficult for owners to shift plans quickly, he said.

"It's a real kick in the guts."