In yet another example of how the Olympics are a financial vortex and a terrible growth plan for cities, Tokyo, the host of the 2020 Summer Games, has revealed that its costs have already doubled initial estimates.
Tokyo won the 2020 Games with a bid that estimated costs would be 730 billion yen, or $6.6 billion. That cost now, according to an AP report? An estimated 1.4 trillion yen, or $12.6 billion. And the Games are still more than three years away.
Part of the reason for the cost overruns is the nature of the bidding process. In order to achieve apples-to-apples comparisons, the IOC requires only basic cost breakdowns for facilities. External matters, such as specific designs, security, and transportation, aren’t included in the initial estimate. Plus, the Games have added five more sports since Tokyo won the bid in September 2013, and construction costs in Tokyo have increased.
The $51 billion price tag for Sochi in 2014 caused numerous cities to drop out of the bidding for future Games, understanding that trying to even come within shouting distance of such a figure would mean economic hardship on a nationwide scale. In response, the IOC has sought to encourage cities to use existing or temporary facilities in lieu of building new ones.
Tokyo is in the grips of a debate over how to proceed with the Olympics given that one estimate put the cost of the Games at as high as $27 billion. A new cost-sharing agreement will require the city of Tokyo and the Games’ local organizing committee to contribute $5.4 billion apiece, with Japan’s central government adding $1.4 billion. The remaining $315 million must be handled by Tokyo and local host governments. All of that assumes, of course, that costs will not rise any further. And once the Games are over and all dedicated funding sources exhausted, Tokyo taxpayers must handle whatever else remains.
Jay Busbee is a writer for Yahoo Sports and the author of EARNHARDT NATION, on sale now at Amazon or wherever books are sold. Contact him at email@example.com or find him on Twitter or on Facebook.