Postponement of 2020 Tokyo Olympics

  • Global
  • Sport and Major Events Risk Management

Postponement of 2020 Tokyo Olympics signals ongoing negative impact of COVID-19 outbreak

The organisers of the Tokyo 2020 Olympic and Paralympic Games on 24 March agreed to a one-year postponement of the event due to the COVID-19 outbreak.

Three key risk points

1/ Several countries pushed for postponement or announced that their national teams would not attend, signalling increasing concern at a national level about the accelerating outbreak.

2/ The postponement highlights the challenges faced by businesses as a result of coronavirus and its significant economic cost.

3/ While it is impossible to forecast the scope, severity and duration of the outbreak, we assess that companies should prepare for the crisis – or at least some of its operational impacts – to last months rather than weeks.

International concern

The postponement of the 2020 Olympic Games, which were due to begin on 24 July, marks the first such delay to the games. It follows increasing public calls (outside of Japan) to delay the Games due to the accelerating pandemic.

Both Canada and Australia withdrew their competitors from the games due to the COVID-19 pandemic in recent days. The Canadian Olympic and Paralympic Committees on 23 March announced their decision to withdraw, stating that the current schedule would threaten the health of Canadian athletes. Australia subsequently announced its decision to withdraw, with its statement also acknowledging the impact of the disruption caused by the outbreak upon its athletes’ preparation. Countries including the US and the UK had publicly called for a delay. Other countries are reported to have privately pushed the International Olympic Committee (IOC) to delay.

Economic cost

Until very recently, the IOC and the Japanese government and Tokyo organising committee had stated that the games would not be delayed. The impact of a postponement was reflected in a 23 March statement by an IOC member that the IOC had not hurried the announcement in order to present Japan, sports federations and sponsors with a clear alternative plan.

The postponement will have a significant negative economic impact. Estimates of economic loss to Japan vary; one widely cited figure states that the country has invested more than USD 10bn. The decision to postpone rather than cancel the event will mitigate the impact on this and future investment. Impacts will be felt across sectors such as those engaged in preparing for the delivery of the games, like the service and hospitality sectors.

The global economic ramifications are also uncertain. Significant partnerships have been signed between the IOC and major companies to sponsor the games and these will likely continue as most sponsors are long-term IOC partners. Further, the IOC generates significant revenue through sale of broadcasting and marketing rights – USD 5.7bn for the period 2013-16 – and will need to address the impact of a revised schedule.

Continuing disruption

The postponement announcement, while significant, is the latest in a series of large-scale sporting and business-focused events that have been cancelled or delayed as a result of the COVID-19 outbreak. As the virus continues to spread, tighter containment measures worldwide are likely to lead to further operational disruption to businesses, with restrictions on movement of persons – both domestically and across borders – increasingly being imposed, together with the mandatory closure of non-essential businesses. The resultant disruption to supply chains is likely to continue in the coming months.

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