Tokyo Olympics will need bailout if games go ahead without spectators

The Tokyo Olympics will need a public bailout of about $800m if the games are held behind closed doors, as organisers delay a decision on domestic spectators to the last possible moment.

Recent budgets show the Tokyo 2020 organisers are still assuming full stadiums. Having already spent the billions of yen raised from ticket sales, a new subsidy from taxpayers would be the only way to finance refunds, according to a Financial Times analysis of organising committee accounts.

With Japan’s government determined to press ahead and hold the games from July 23, the decision of whether to allow local fans into the stadiums has become one of the biggest controversies surrounding the Olympics.

Speaking at the G7 summit in Cornwall, Yoshihide Suga, prime minister, signalled that Japan was determined to allow spectators if it could.

“Taking into account the level of Covid-19 infections, we’ll decide [on capacity] in accordance with the numbers allowed at other sporting events,” he said.

If spectators are fully or partially banned, the city of Tokyo will be on the hook to refund their tickets after it agreed to underwrite the cost of staging the delayed games.

Of the ¥668bn ($6.1bn) income the organising committee has budgeted for this year, ¥90bn is supposed to come from ticket sales, accounting for about half of the commercial revenue for Tokyo 2020. The remainder is coming from public funding.

A balance sheet published by Tokyo 2020 last week showed a liability of ¥118.3bn for advance payments received. Most of that represented ticket revenues from the Japanese public, who handed over their cash almost two years ago.

Doctors and public health experts have advised Japan to hold the Olympics without spectators to avoid spreading Covid-19, but organisers and sponsors are desperate to keep at least some fans to get a return on their investment.

Shigeru Omi, the government’s chief medical adviser on the pandemic, has urged Japan to avoid a “festival mood” at the games. Fans celebrating and drinking would lead to the kind of high-risk socialising that spreads the disease, he warned.

“If it’s going to be held, then no spectators is the only option,” said Haruo Ozaki, chair of the Tokyo Medical Association, at a recent press conference.

Tokyo continues to report 300-400 cases of Covid-19 every day and is due to remain in a state of emergency until June 20. Olympic organisers have delayed a decision on spectators until the end of June, hoping that the virus situation will have improved.

Sponsors are eager to have spectators since they gave away tickets to some of the biggest moments of the games in competitions and other marketing events.

“A big issue for sponsors is whether they can allow the winners of the consumer campaigns they started running ahead of the games last year to attend,” said one marketing executive who is advising several Tokyo 2020 sponsors on how to handle the games.

“Most of the sponsors have already profited a lot from ticket campaigns. If these tickets are cancelled, they are going to face a lot of backlash.”