On the surface, it sounds like a mammoth sum and generous commitment. The International Olympic Committee, president Thomas Bach said Thursday, “approved an envelope of up to $800 million to address the financial consequences of this COVID-19 crisis.”
That, Bach said on a teleconference with reporters, includes $650 million that will go toward the re-organization of the postponed Tokyo Olympics, and $150 million to aid sports federations and national Olympic committees struggling amid the coronavirus pandemic.
What he did not mention is that Tokyo and the local organizing committee are reportedly on the hook for far greater sums.
IOC, Tokyo share costs unevenly
The IOC settled on the $800 million figure at its first-ever fully-remote executive board meeting – which ran longer than expected – and after weeks of discussions and deliberations. The $650 million is, essentially, the share of postponement-related costs that the IOC expects to bear.
But a variety of estimates have pegged the total additional cost at somewhere between $2 billion and $6 billion. The majority of the responsibility, therefore, will fall to the Japanese. To the Tokyo organizing committee and to the government. And by extension, of course, to taxpayers.
This is the Olympic scheme, and postponement is merely an addendum to it. Japan has already spent some $25-30 billion to host the Games. Locals foot the bill and allow the IOC to profit. Tokyo’s host-city contract ensures it will continue to do just that. In public and behind-the-scenes, Tokyo officials have bickered with the IOC over who will shoulder the financial burden. But it’s a battle they almost surely cannot win.
Whether the IOC’s contribution is above-and-beyond or insufficient is a matter of perspective. But its financial situation, overall, is strong. A year ago, it had some $900 million in its primary reserve fund, the “Olympic Foundation” portfolio, the purpose of which “is to cover the operating expenses of the IOC over an Olympiad in which no Games were held as part of the overall IOC risk management strategy.” Bach said the IOC “may have to refer to or from” the Olympic Foundation fund to cover its new $800 million commitment.
But because of this risk management strategy, the IOC is “enjoying long-term stability,” as Bach wrote last month. In other words, it is on more firm ground than any national economy during the pandemic. And it is more than capable of handling its share of the exorbitant Olympic bill.
Bach did point out on Thursday’s teleconference, however, that coping with coronavirus consequences “is an incremental process.” They’ve approved this “envelope,” but “cannot foresee … every item which can occur.”
Said IOC COO Lana Haddad: “It’s a little too early to assess and pull together all known and unknown costs that impact the operation. We are trying to do normally what we do in several years in one year. … This is an ongoing, complex process.”
And all of this, of course, assumes the Games actually occur.
Bach says focus is on 2021, not further postponement or cancellation
Bach, in general terms, has acknowledged “uncertainty” in all aspects of life amid the pandemic. What he has not explicitly acknowledged is that whether the Olympics can safely be held in 2021 remains a legitimate question.
When asked about vaccines, contingencies, and the possibility of limited fan attendance in Tokyo, Bach said: “It’s way too early to draw any conclusions now.”
When asked about further postponement or cancellation, he said organizers “are now working with full engagement” toward holding the Games in July-August of 2021. In a “safe environment,” of course. But he refused to fuel speculation by entertaining alternatives.
There was, however, one admission: The IOC and Tokyo organizers, like the entire world, are cutting back on luxury. “Society will be more concentrated on essentials, and maybe not so much anymore on the nice-to-have things,” Bach said. “And all this will be reflected in the organization of these postponed Olympic Games. … We want these Olympic Games to be frugal Games.”
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