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Tokyo Olympic budget expected to hit $25 billion

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TOKYO (AP) — The price tag keeps soaring for the 2020 Tokyo Olympics despite local organizers and the International Olympic Committee saying that spending is being cut.

A report just released by the national government’s Board of Audit shows Japan is likely to spend $25 billion to prepare the Games, and the final number could go even higher.

This is nearly a four-fold increase over Tokyo’s winning bid in 2013, which the report said projected costs of 829 billion yen, or $7.3 billion at the current exchange rate of 113 yen to the dollar.

Tracking Tokyo costs is getting more difficult as work speeds up, deadlines near, and disputes arise about what are — and what are not — Olympic expenses. Complicated accounting also makes it difficult to figure out who pays for what, and who profits.

“It’s the most amazing thing that the Olympic games are the only type of megaproject to always exceed their budget,” Bent Flyvberg, an authority on Olympic budgeting, said in explaining his research: “The Oxford Olympics Study 2016.”

Flyvberg said the study failed to “find even one” Olympics that came in on or below budget.

Tokyo is a case study.

In December, the Tokyo organizing committee said the Olympic budget was 1.35 trillion yen, or about $12 billion.

This consisted of equal contributions of 600 billion yen ($5.3 billion) from the organizing committee and the Tokyo metropolitan government, with another 150 billion yen ($1.3 billion) coming from the national government.

But a month later, Tokyo Governor Yuriko Koike said the city needed to chip in an added 810 billion yen ($7.2 billion) “for projects directly and indirectly related to the Games.” She said this included building barrier-free facilities for Paralympic athletes, training programs for volunteers, and advertising and tourism plans.

This raised the overall costs to 2.16 trillion yen, or about $19.1 billion.

The IOC and local organizers dispute these are Olympic expenses, describing them as “regular administrative costs” that fall “outside the overall Games budget.”

Flyvberg credited organizers of recent Olympics with trying to control costs, but tight Olympic deadlines make it difficult. Other large building projects can be pushed back a few months. Not the Olympics.

He also said it was inefficient for different cities to keep organizing the Games.

“All you can do when problems begin — and problems always begin on projects of this size — is to throw more money at the project,” Flyvberg said.

Another Tokyo cost increase popped up a few days ago.

A 178-page report by the Board of Audit said the national government’s share of spending had increased to 801 billion yen ($7.1 billion) from the $1.3 billion estimated back in December.

This brings total spending to 2.81 trillion yen, or just under $25 billion, with suggestions it could reach 3 trillion when the games open in just under two years.

The report said “a large amount of spending was expected to continue after 2018 leading up to the event.”

The report urged organizers, the Tokyo city government, central government, and local agencies to increase transparency.

In a statement Tuesday to The Associated Press, local organizers again disputed what should be called Olympic costs.

Spokesman Masa Takaya said expenditures listed such as “inbound tourism, road constructions, subsidy for creating a hydrogen society, and even improving accuracy of weather forecasts with better satellites,” should not be considered Olympic expenses.

The audit report also faulted Tokyo organizers for excluding other expenses from the budget. The report said these came to about 650 billion yen ($5.6 billion) and included things like: repairs to existing buildings; security costs; the cost of running doping facilities.

It said the organizing committee’s December budget did “not reflect all the costs related to the operation of the event.”

About 80 percent of the $25 billion will be taxpayer money. The rest — about $5.3 billion — comes from the privately funded operating budget. This budget receives $1.7 billion from the IOC with the rest coming from sponsors, merchandising and ticket sales.

Tokyo organizers say they have saved billions in the last several years by using existing venues, holding shorter test events and by making other cuts in construction.

The IOC has also tried to promote frugality, aware that hidden and soaring costs have driven away many possible Olympic bidders — particularly for the Winter Olympics.

Three bidders remain for the 2026 Winter Olympics: Calgary, Canada; Stockholm, Sweden; Milan-Cortina, Italy. Several others dropped out.

Organizers of the recent Winter Olympics in PyeongChang, South Korea, reported a budget surplus of $55 million this week. Meanwhile, the provincial government is complaining about paying millions for upkeep on empty venues, with the national government unwilling to assume the costs.

There is talk of razing several empty venues.

“Even though people try to bring down costs, it’s very difficult,” Flyvberg said. “But there is some progress. But not nearly as much as for other types of megaprojects.”

Flyvberg added that “for a city and nation to decide to stage the Olympic Games is to decide to take on one of the most costly and financially most risky type of megaproject that exists, something that many cities and national have learned too their peril.”

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IOC group proposes Olympic ‘host’ can be multiple countries

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International Olympic Committee members will decide next month whether to tweak the definition of an Olympic host to make it clear that it does not necessarily refer to a single city but can also mean multiple cities, regions and even countries, IOC President Thomas Bach said Wednesday.

“It’s not an encouragement to spread the Games out as much as possible,” Bach said in announcing the IOC’s executive board approved the measure. “It may be preferable to have a region as a signatory or an additional signatory of the host city contract rather than just a city, and therefore, we wanted to enjoy this flexibility. This, on the other hand, does not change our vision, our request and our focus on having not only an Olympic Village, but to have an Olympic center.”

It’s one of six proposed changes by a working group chaired by Australian IOC member John Coates to examine the bid process. Another is to make the timing of Olympic host city elections more flexible. Typically, hosts are elected seven years before the Games, though two years ago an exception was made in the double awarding of the 2024 and 2028 Games to Paris and Los Angeles.

Bach repeated that the proposals are “to avoid producing too many losers as we had it in the past candidature procedures.”

The IOC previously said in 2014, in announcing Agenda 2020, that it “will allow events held outside the host city or, in exceptional cases, outside the host country, notably for reasons of geography and sustainability.”

This shift manifests in Stockholm’s 2026 Winter Olympic bid plan to have sliding sports in Sigulda, Latvia, home of the nearest existing track for bobsled, luge and skeleton, rather than building a costly new track in Sweden.

IOC members will vote to choose the 2026 Winter Games host next month. The finalists are Stockholm and a joint Italian bid of Milan and Cortina d’Ampezzo, after five other potential candidates were dropped for various reasons.

There is precedent for events held far from the Olympic host city. In 1956, Melbourne held the Summer Games and had equestrian events in Stockholm due to quarantine laws in Australia. Similarly, equestrian at the 2008 Beijing Games was held in Hong Kong.

Soccer matches are often held in cities across the host country. Recent Winter Olympics have had mountain events in a different city or area than arena events.

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IOC board recommends AIBA suspension, boxing stays in Olympics

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The International Olympic Committee executive board recommended that AIBA has its recognition as boxing’s international federation suspended but that the sport remains on the Olympic program at the 2020 Tokyo Games.

An IOC decision on the recommendation will be made next month. The IOC created a group to organize 2020 Olympic boxing qualifying and competition if AIBA will not be allowed to run it.

“We want to ensure that the athletes can live their dream and participate in the Olympic Games Tokyo 2020 while drawing the necessary consequences for AIBA,” IOC president Thomas Bach said in a press release. “At the same time, we offer a pathway back to lifting the suspension, but there needs to be further fundamental change.”

The IOC said in October that boxing’s place in the Olympics was “under threat” after being introduced at the 1904 St. Louis Games and held at every Games since except Stockholm 1912.

In November, the IOC ordered an inquiry into AIBA, which has been in financial turmoil, faced claims of fixed bouts at the Rio Games and elected a president linked to organized crime.

That president, Uzbek Gafur Rakhimov, stepped aside in March to let an interim leader take charge but said he was not resigning. Rakhimov is on a U.S. Treasury Department sanctions list for suspected links to an organized crime group in former Soviet Union republics involved in heroin trafficking. He denies any wrongdoing.

“Serious governance issues remain, including breaches of the Olympic Charter and the IOC Code of Ethics regarding good governance and ethics, leading to serious reputational, legal and financial risks for the IOC, the Olympic Movement and its stakeholders,” the inquiry committee concluded. “AIBA has been unable to demonstrate a sustainable and fair management of refereeing and judging processes and decisions, increasing the lack of confidence that athletes can have in fair competitions.”

The Associated Press contributed to this report.

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