The Summer Olympics have been cancelled only thrice ever since its commencement in 1896. First cancelation during World War I and twice during World War II. With 28 Olympic games held over 125 years, it’s the first time in history where the competition has been postponed for a reason other than war; the COVID-19 PANDEMIC. This postponement and the resulting uncertainty have already developed chaos at the global level. Moreover, the exorbitant demands from the International Olympic Committee (IOC) have exacerbated the issues for a stagnating Japanese economy. 


The Japanese post-war economic miracle during 1945-56 and rapid economic growth came to a halt in the 1990s. The then second-largest economy faced a prolonged economic slump with the crash of the Tokyo Stock Exchange and hence, the years since 1991 were termed as ‘The Lost Decades’. A shrinking tax base, ageing society and low growth rate expanded the national debt of Japan. The 2008-09 global recession followed by earthquake, tsunami and the Fukushima nuclear disaster in 2011 further collapsed the economy. Japan has a national debt of USD 11 trillion and the highest debt-to-GDP ratio of 223%. This crumpled economy was financially challenged even further when Tokyo was awarded the 2020 Olympics in 2013.


The original cost estimate for the 2020 Olympics was $7.3 billion in 2013. Today the expert estimates run to $26 billion. This financial surge can be linked to the venues themselves. The International Olympic Committee is resolute on the requirements of large venues although it doesn’t invest in its infrastructure. Special infrastructures need to be developed specifically for the Olympics which includes an Olympic village, media and television production facility, ceremonial space and green space. Japanese architect Kengo Kuma designed a 68,000 seated stadium that costs $1.4 billion. The cost of the gymnastics center was doubled to $200 million by the time it was completed in 2019. The badminton and pentathlon plaza costed $330 million and the aquatic center for swimming and diving costed $540 million. The volleyball arena costed $320 million and the canoe and kayak center with $65 million. However, such cost overruns are a norm for the Olympics but Japan’s expenditure was worsened by some other factors as well.

Yen’s depreciation led to an increase in the import cost of construction materials along with a serious labor shortage. Unprecedented pandemic-related debts are also on the list of issues. A yearlong postponement increased the operational costs to $1.6 billion. Twenty-one buildings constructed in the Olympic village cost nearly $2 billion but today they are sitting empty. The opening and closing ceremonies featuring hundreds of performers, laser light shows, fireworks and the lighting of the Olympic cauldron have an expected cost of $118 million. The loss of ticket sales is expected to reach more than $850 million. Many of the warm-up events which could have brought in revenue were cancelled as well. Now, if the Olympics are to be conducted amidst the pandemic, then $900 million would be an added expense for COVID precautions which makes the total delay costs to $2.8 billion. The expenses of individual athletes also add to this burden. 


The depressing financial condition that Japan finds itself in has made the IOC bring in more radical changes and significant cost reductions for the future host cities. All the cities that hosted the Olympics in the past 50 years had overrun the budget but Tokyo 2020 is estimated to be the most expensive one of all time. While Rio 2016 costed USD 12 billion, London 2012 spent USD 13.7 billion. These budget overruns have led to a steady decline in the number of countries bidding for the Olympics from eleven candidates in 2004 to just two bids for the 2026 games. Recognizing the expensive nature of the games, the IOC adopted a New Norm in 2018 which provided more flexibility to the host countries in designing the venue of the games so that it meets the short term and long-term development goals of the host nations. The IOC implemented the Olympic Agenda 2020 intending to reduce the financial burden on the host countries by liberalizing the venue requirements and reducing the cost of bidding. The host countries can choose projects that best fit their economic, sporting, social and environmental planning rather than just fulfilling the requirements of the IOC. The IOC also discouraged the building of unnecessary venues and instead urged to conduct the games in suitable existing facilities to attain sustainability in all aspects. Since host countries change for every Olympics, a series of long-term financial and environmental damages are left behind which pushes the need for a solid plan regarding the use of venues post Olympics.


While the public wants the games to be either cancelled or at least postponed, IOC vice president John Coates is resolute on conducting it despite the COVID-19 pandemic. The country’s healthcare system and government are under great pressure in battling the fourth wave of infections and stated that hospital beds will not be allocated to the athletes. About 300 doctors and 400 nurses will have to be appointed for taking care of the athletes which would be burdensome for the health department while the public itself is in danger. The Doctors Union in Japan is also against the Olympics as the percentage of citizens vaccinated is currently in single digit. But Japan has expended a lot of money on the event and the cancellation of the games would just aggravate Japan's financial hardships as it wouldn’t be able to recover any of the cost it spent.



The 2020 Olympics is scheduled to be conducted from 23rd July to 8th August, 2021 without any in-person spectators. While the cancellation of the Olympics would crush the dreams and ambitions of thousands of passionate athletes, it would still be a COVID variant exchange hub with athletes from all across the world. Olympics is a massive bill with low return investment. The government needs to make a decision that will balance both the economy and health of the nation. Any economic gains from the Olympics would be futile if the virus spreads uncontrollably. Questions like ‘What is to be gained by going ahead with the Olympics?’ and ‘Is Olympics worth the risk?’  remain unanswered as Japan prepares itself for the games. Whether the games will be conducted, is yet to be seen.