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Tokyo 2020 Olympics

Five ways the Tokyo Olympics delay creates a logistical nightmare

Japan faces headaches over costs, refunds, venue scheduling and more

The postponement of the Tokyo Olympics means widespread economic pain and major logistical challenges.

TOKYO -- For the first time in modern history, a peacetime Olympic Games has been called off. Japanese Prime Minister Shinzo Abe said he wants the event, when it is ultimately held, to be a symbol showing that "humanity overcame the coronavirus."

Tuesday's announcement that the Tokyo 2020 Olympics, originally scheduled to begin in July, will be postponed until the summer of 2021 offered a sense of relief to many in Japan and around the world. Athletes who were training in uncertainty now have more time to prepare and catch up with qualifying events and other disruptions caused by the spread of COVID-19. And the potential risk of millions gathering in Tokyo this summer amid the pandemic has been abated.

But the same cannot be said for the Japanese government and the Tokyo organizing committee. They both now have little more than a year to figure out the logistical nightmare the postponement has brought about.

Here are five challenges Japan faces.

Can the Tokyo organizing committee secure venues?

The Olympic Games were supposed to be held in 43 venues across Japan, including Tokyo's newly built Olympic Stadium and Ariake Arena. In addition to the competition sites, the organizing committee also needs to secure a venue for the media center. To rent such locations, the organizing committee had budgeted 53 billion yen ($476.4 million) over the duration of the Games.

"There may be plenty of venues that are already reserved for the next year," Yoshiro Mori, president of the organizing committee, told reporters on Tuesday night. "It will generate additional costs if we rent them again, and we may have to extend the renting contract [till next year] depending on the venues."

Then there is the question of the Olympic Village, for which new condominiums were built in Tokyo's Chuo Ward to house around 5,000 athletes and their trainers. Mitsui Fudosan Residential and its partners started selling the condominiums in the 4,145-unit Harumi Flag complex in July 2019, with some residents scheduled to move in from March 2023 at the earliest.

"We would like to decide on how to respond after confirming with stakeholders, including the Tokyo Metropolitan Government and the Tokyo Organizing Committee of the Olympic and Paralympic Games," said a Mitsui Fudosan spokesperson.

Can Japan cover the additional costs?

The question that naturally follows is whether the organizers can afford the unexpected cost of rescheduling the Olympics. Although the Tokyo government and the organizing committee have 27 billion yen in emergency reserve funds, that would not be enough to cover the additional expenses.

Nikkei reported on Wednesday that rescheduling the games would cost the Tokyo organizing committee 300 billion yen ($2.7 billion) as it incurs additional venue rental fees, labor costs for staff and security, and hotel rebookings for Olympic officials. Even before the postponement, the cost of staging the games had already reached $12.6 billion.

Lawyers will be busy figuring out whether the organizing committee owes reimbursements to its domestic sponsors, who have invested 348 billion yen, accounting for nearly half of the committee's revenue. That discussion will be separate from the one between the International Olympic Committee and its official broadcasters, who have paid billions of dollars in licensing fees for the Tokyo games.

The organizing committee's Mori said that the committee "will discuss who and how (we) will cover the costs."

Can Japan secure public health for athletes and spectators?

While no one can predict how long the pandemic will last, Abe pledged to host a "safe and secure" Olympic Games next year.

As of March 24, Japan's number of coronavirus cases is 1,193 and remains far below those seen in countries such as Italy, Iran and the United States. Businesses and schools are easing out of a monthlong voluntary shutdown and the state of emergency in Hokkaido, the northern island which early on saw the highest number of clustered infections, has been lifted.

But experts warn that the situation could quickly change at any time with a possible explosion of new infections. Tokyo Governor Yuriko Koike told reporters on Monday that she would possibly "lock down the capital" if the situation grows more serious.

On Tuesday, metropolitan government officials said Tokyo has seen a total of 170 confirmed infections, making it the prefecture with highest number of cases in Japan.

Can Japan's economy stay afloat until next summer?

The postponement is an undeniable blow for a national economy that this year was counting on a surge in Olympic-related demand both domestically and from visitors. Katsuhiro Miyamoto, professor emeritus of sports economics at Kansai University, estimated that the postponement will result in an economic loss of 640.8 billion yen.

The one-year delay will affect a wide range of industries, especially hotels, restaurants and retailers. Businesses both large and small have already taken a hit from the coronavirus that has shut down travel worldwide. Domestic consumption has already weakened since October, when the government raised sales tax from 8% to 10%.

Abe's government had set a goal of raising the number of inbound tourists to 40 million this year, but the pandemic has made it "impossible" to achieve the goal, said Takayuki Miyajima, senior economist at Mizuho Research Institute. This year, the rate of decrease in the number of inbound tourists will exceed that of 2011, when arrivals fell by 28%, the sharpest decline in Japan's history, according to Miyajima.

Can Olympic ticket holders get refunds?

The Tokyo organizing committee has sold 4.48 million tickets in Japan alone, out of the 6.8 million available worldwide. Olympic tickets currently come with a no-refund policy, and a decision has not yet been made on whether that will change.

The fine print that comes on the tickets says: "Tokyo 2020 shall not be liable for any failure to perform any obligation under the Terms and Conditions to the extent that the failure is caused by a Force Majeure." Force majeure may conceivably include unforeseen public health emergencies, like the coronavirus pandemic.

Although Tokyo 2020 oversees ticketing for the games, a spokesperson for the organizing committee told Nikkei that it is leaving the refund matter to the IOC to decide.

"We will give our full attention [to those who already have tickets] and respond appropriately in a way that will not cause any trouble," said Toshiro Muto, CEO of the Tokyo 2020 organizing committee.

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