Hands up if you’re broke.
Hands up if you’re broke.

Tokyo Olympics costs soar past $35 billion

THE price tag keeps soaring for the 2020 Tokyo Olympics despite local organisers 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 $35 billion (AUD) to prepare the games, and the final number could go even higher.

This is nearly a fourfold increase over Tokyo's winning bid in 2013, which the report said projected costs of $10.3 billion.

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 organising committee said the Olympic budget was 1.35 trillion yen, or about $17 billion.

This consisted of equal contributions of $7.5 billion from the organising committee and the Tokyo metropolitan government, with another $1.8 billion coming from the national government.

But a month later, Tokyo Governor Yuriko Koike said the city needed to chip in an added $10.1 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 about $26.8 billion.

Costs have soared higher than Mt Fuji. Picture: Alamy
Costs have soared higher than Mt Fuji. Picture: Alamy

The IOC and local organisers dispute these are Olympic expenses, describing them as "regular administrative costs" that fall "outside the overall games budget."

Flyvberg credited organisers 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 organising 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 $10 from the $1.8 billion estimated back in December.

This brings total spending to about $35 billion, with suggestions it could reach 4.2 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 organisers, the Tokyo city government, central government, and local agencies to increase transparency.

In a statement Tuesday to The Associated Press, local organisers 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.

Tokyo Governor Yuriko Koike and Tsunekazu Takeda, president of the Japanese Olympic Committee. (AP Photo/Eugene Hoshiko, File)
Tokyo Governor Yuriko Koike and Tsunekazu Takeda, president of the Japanese Olympic Committee. (AP Photo/Eugene Hoshiko, File)

The audit report also faulted Tokyo organisers for excluding other expenses from the budget. The report said these came to about $7.9 billion and included things like: repairs to existing buildings; security costs; the cost of running doping facilities.

It said the organising committee's December budget did "not reflect all the costs related to the operation of the event."

About 80 per cent of the $35 billion will be taxpayer money. The rest - about $7.5 billion - comes from the privately funded operating budget. This budget receives $2.4 billion from the IOC with the rest coming from sponsors, merchandising and ticket sales.

Tokyo organisers 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.

IOC President Thomas Bach said Tuesday the Olympic body had no influence over what audits in Japan defined as games expenses.

"We have to live there with the difference that an accountant may introduce something to the Olympic Games where we say this has nothing to do with the Olympic Games." Bach told a news conference at the Youth Olympics in Argentina. 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.