Can 2020 Tokyo Olympics still be a revenue boom?

After weeks of speculations and fears of Covid 19, the much talked about Olympics, the rescheduled 2020 Tokyo Olympic Games officially kicked off last Friday, July 23 in Japan.

Staging the Tokyo Olympics at these difficult times where the pandemic has crumbled activities with sports the biggest hit, has not been easy for Japan and the International Olympic Committee (IOC), which runs the Olympic Games.

Over $15.4 billion has been spent by the Japanese government with $6.7billion coming from the taxpayers. But the fear is that organizers and the IOC could lose billions of dollars if the Olympics are canceled due to COVID-19 for a second time.

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Cost of cancelling the Olympics

Over 11,000 athletes from 200 countries are in Tokyo for the Tokyo Olympics amid coronavirus, but the stakes are higher for advertisers, Japan and IOC who are feeling anxious about the more than $1 billion they have spent to run ads.

Calls to cancel the more than $15.4 billion showpiece have intensified as more athletes test positive for Covid-19.

Japan medical adviser Dr. Shigeru Omi has said it is abnormal to hold the Olympics during a pandemic.

CNN reports say that about 15.1 percent of Japan’s population are fully vaccinated.

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Questions have been raised about the health risks of participants and the World Health Organization and other health bodies have been blamed for not taking a clear stand on the 2020 Olympics in Japan.

Even the local media are joining the calls for cancellation. For example, Asahi Shimbun, one of the biggest selling newspapers in Japan, has called for the Olympics to be canceled.

Calling off the Tokyo Olympics comes with huge financial implications. Japan has officially spent $15.4 billion, but government audits suggest it’s twice that much. Japanese advertising giant Dentsu Inc., has raised more than $3 billion from local sponsors.

Cancelling the 2020 Tokyo Olympics could cost the IOC $3 billion-$4 billion in lost broadcast rights income. Sponsors account for 91 percent of the IOC income, and American network NBCUniversal provides about 40 percent of the IOC’s total income.

Relief for organizers and advertisers

Despite some fears, the Tokyo Olympic Games promises to be a revenue generator.

The Olympics is always a major draw for sponsorship dollars, and despite pandemic fears, the Tokyo Games have registered over 60 sponsors and brands at various levels of endorsement.

Coca-Cola, Toyota, Visa, Airbnb, Samsung, and Procter & Gamble are some of the big brands in Tokyo.

Read also: Tokyo’s Olympics leaves Japan swamped in a pool of debt

Several other popular brands like athletic wear brand Asics, camera maker Canon, and beer brewer Asahi.

Brands hopeful on return on investment

Stakeholders and analysts are optimistic the Olympic Games can still be a revenue driver for companies and sponsors.

Big brands have spent over $1 billion on ads on the Tokyo Olympics, which is ongoing in empty arenas as the pandemic lingers.

NBC believes the Games is a revenue booster and paid $7.7 billion for broadcasting rights to show the Olympics through 2032, and it’s already sold $1.25 billion in ads for the Tokyo games.

There are more than 140 sponsors for NBC’s coverage on television, on its year-old streaming platform Peacock and online, an increase over the 100 that signed on for the 2016 Summer Games in Rio de Janeiro.

“Not being there with an audience of this size and scale for some of our blue-chip advertisers is not an option,” said Jeremy Carey, the managing director of the sports marketing agency, Optimum Sports.

NBC also revealed it had exceeded the $1.2 billion in U.S. ad revenue for the 2016 Games in Rio and had sold all of its advertising slots for the opening ceremony, adding that the price for a 30-second commercial exceeds $1 million.

Streaming audience to increase

Television has attracted the bulk of the ad spending, but the amount brought in by digital and streaming ads is on the rise, according to Kantar. Several forecasts predict that TV ratings for the Olympics will lag the Games in Rio and London, while the streaming audience will grow sharply.

The Associated Press (AP) reports that the IOC stands to make $3 billion to $4 billion on television rights from the 2020 Olympics. One NBC executive said they believe this could be the most profitable Games ever.

The Olympics have long been an ideal platform for companies looking to promote their brands, with plenty of opportunities to nestle ads, and brands executives believe this could be the most profitable Games ever.