The financial cost behind delaying the Olympic Games
The decision to postpone this summer’s Olympic Games due to the coronavirus pandemic will come at some cost, but the International Olympic Committee is unlikely to suffer heavy losses as a result of the delay.
The postponement until not later than summer 2021 means that in many cases plans will be mothballed, and industry experts do not expect the IOC to be inundated with demands for money back as the Games are only being deferred, not dispensed with.
“Provided the event takes place, the broadcast partners get their three weeks of programming,” Michael Payne, the IOC’s former head of commercial, told the PA news agency.
“You may be dealing with a little bit of re-engineering on the margin, but nothing of substance.”
Sean Maguire, the managing director of Oliver & Ohlbaum, which advises and supports the sports sector on the negotiation of rights deals, said: “A lot of the deals (the IOC) has done go out as far as 2032, so they see themselves as partners, rather than as supplier/customer.
“So I think they will have been talking about ‘what does 2021 look like?’ and what do we need to avoid clashing with, and therefore where can we put it in the schedule, rather than how much money are you going to pay us?”
Maguire is also confident the decision to postpone will not make Olympic television rights a harder sell in future.
“I don’t think so – it’s still the Olympics, it’s still the biggest show in town. Cricket’s been rained off every summer, but cricket still sells,” he said.
“Sponsors lose some exposure but this cycle they have paid for will be extended for a year, so they get to be the official partner of the Olympic Games for an extra year, and I doubt they’ll be paying any extra for it.”
The venue build costs for Tokyo have been placed at up to 15 billion US dollars (£12.77bn), but the plan is still that these venues will be used in 2021 instead.
Venue access agreements will need to be renegotiated by the Tokyo 2020 organising committee, and while the sale of the athletes’ village to private firms is likely to remain ongoing, this is not expected to be a problem either as the firms have only just begun selling the apartments and they were unlikely to take possession for a couple of years anyway.
Spending on technology and outfits for Games volunteers, for example, will not have been wasted – just placed on hold.
The operations of the organising committee will of course need funding for an extra year, but it is thought the costs of postponing the Games will be manageable from an IOC perspective.