Gambling on Gold: Analysis of the 2021 Olympics

The 2020 Tokyo Olympics were supposed to mark the end of an incredible recovery from the devastating 2011 Tōhoku earthquake. However, the big plans for the Olympics quickly came under question when the COVID-19 pandemic threatened the safety of the event. In the end, Olympic organizers decided to postpone the games to 2021 in the hopes of waiting out the pandemic. This decision was governed by a variety of factors including sunken costs, domestic and foreign investments, the safety of those involved, public pressure, political pressure, and of course, the image and power of the International Olympic Committee (IOC).

In the end, Olympic organizers arguably made one of the best decisions possible. But the decision process was partially obscured due to the decision-makers not taking the opinions of the very people affected by their decisions into account. The people who should have had authority in the decision did not.

Investments and Sunken Costs

The long preparations for the 2020 Olympics included a variety of costly investments, both domestic and foreign, which put Japan in a difficult financial position. The government needed to recoup their expenses. In fact, the Tokyo 2020 Olympics are the most expensive in history. “According to officials, the budget is $15.4 billion, but Japanese government auditors have said total spending tops $20 billion,” which includes a broader set of infrastructure costs. Even before the decision to postpone the games, the project had exceeded the budget by over 200 percent. A sizable portion of the money went towards building eight new venues and renovating an additional twenty-five others. Japan had to start investing for and preparing for the Olympics years before they would have a chance to reap benefits. Therefore, Olympic organizers had a motive to continue the games in an effort to recoup stakeholders' investments despite public health risks.

Arguably, stakeholders’ investments were disproportionately considered a factor because decision-makers felt pressure to protect the interests of their investors. While most of the funding was raised by the Japanese government, a sizable portion of funds -- $3.7 billion by June of 2019 -- was secured from corporate sponsorships. Additionally, the IOC is heavily reliant on the sale of Olympic broadcasting rights for its funding. Seventy three percent of IOC funding comes from broadcasting rights, and “about half of those fees are paid by the American broadcaster NBC.” As a result, a variety of foreign investors had a stake in the fate of the Tokyo 2020 Olympics, and these investors had a direct line of communication with the decision makers. This gave foreign investors a disproportionate amount of power in the decision making process.

Public Opinion and Political Pressure

Because of risks associated with COVID-19, a large portion of the Japanese population did not want to host the games. As the event came closer, Japanese citizens expressed more and more discontent. Two months before the games, approximately 83 percent of Japanese citizens did not want to host the games in 2021. It is common for a host nation’s citizens to become discontent with the responsibilities of holding an Olympics as the event draws closer. In fact, the Olympic Games can, and often do, become a vector for public frustration in other areas.

The Olympics became a focus of frustration about the COVID-19 pandemic. Specifically, Japanese citizens were incredibly frustrated with the government’s handling of COVID-19, and the continuation of the Olympics seemed to completely undermine government messaging about the dangers of the pandemic. In the eyes of Japanese citizens, it is hypocritical of the government to expect citizens to obey strict safety and isolation guidelines when the government is also irresponsibly allowing the production of an event involving hundreds of thousands of people. Thus, the Olympic Games became a symbol of governmental hypocrisy and vector for public frustration.

Moreover, if the Olympics went poorly, then the citizens of Japan would be the ones that would have to deal with the direct consequences. If the Olympics caused a COVID-19 outbreak in Tokyo, then the citizens of Tokyo would be the ones that would have to quarantine and possibly go into lockdown. If that infection spread outside the city, then the rest of the country would have to deal with those consequences as well. In this case, Japanese citizens, especially citizens of Tokyo, were taking on the burden of the public health risks associated with the games, but when compared to financial investors, these citizens arguably had a disproportionately quiet voice in the decision making process. However, Japanese citizens would have a voice in the perceived outcome of the games.

Due to the timing of the 2021 Japanese elections, citizens would be able to voice their frustrations with the government through their votes. The elections were set to take place on October 31st, 2021, just over a year after the original date of the Olympics and approximately two months after the postponed date. The close proximity of the Olympics to the elections meant that the outcome of the event would be fresh on voters' minds. Thus, the Japanese government was under political pressure to appease its citizens, the majority of which wanted to cancel the games. However, the government was also under immense financial pressure to continue the games no matter what.

COVID changed plans

The pandemic created a variety of unforeseen risks for Olympic organizers. As the original date of the Olympics drew closer, the size of the event became a cause for concern. These Olympic games were meant to include 339 individual events, the most of any Olympics, meaning that a combination of 50,000 athletes, reporters and other ceremonial officials would be present.¹¹ This doesn’t include the hundreds of thousands of fans who bought tickets. Thus, the size of the Olympic gathering posed a serious health risk because of the pandemic’s status. The size of the event was also a concern as the postponed date of the Olympics came around.

Additionally, there were travel risks present for both possible Olympic dates. People were coming from all over the world and traveling by plane for long hours, further increasing the risk of spreading Covid-19. Moreover, there was also the risk of people bringing the disease home with them once the games were over. This could have potentially been a catalyst for a mass spreading of the virus.

Once the decision was made for the Olympics to be held in 2021, there were still concerns about the risk of spreading the virus. All of these risks were further elevated by the late appearance of the more infectious delta variant. The delta variant was first reported to be in Japan in mid-August, just after the end of the Olympics. Based on the proximity of the dates, there was a risk that the Olympics spread the virus to Japan. At the time of the decision, the possibility of this risk was known about and could have been factored in.

Additionally, the vaccine had not been invented by the time of the original date of the games. However, vaccines were in production by the time of the postponed date. Before widespread use of the vaccine, the risk of spreading the disease was considerably higher. After the postponement, the availability of the vaccine decreased some risks. However, by the time the postponed Olympic Games commenced, only 22% of the Japanese population was fully vaccinated. Vaccine rollout around the world also occurred at different paces, meaning that there were still large populations who had not been vaccinated by the time of the postponed date.

Who has the power to cancel the Olympics?

Three modern Olympic games have ever been canceled, either during WWI or WWII. More recently, no country has never refused to continue with their obligations to hold an Olympic games. Despite this precedent, the cancellation of the 2020 games was possible. Because of the public health risk and the public pressure of an upcoming election, arguably, it could have been in the Japanese government’s best interest to back out of the games. The problem with that strategy is that it is unclear whether the Japanese government had the power to cancel the games.

The Olympic Host City Contract -- the agreement between IOC and host city to hold the games -- directly states that the IOC has the power to cancel the contract and therefore, cancel the Olympic Games. However, the power dynamics are a bit more complicated. First of all, the contract is only directly between the City of Tokyo, the IOC, and the Japanese Olympic Committee. Therefore, it is unclear what power the broader Japanese government had in relation to the continuation or cancellation of the games. Second of all, the Japanese government has the power of a nation, and the IOC only has the power of an organization. It could have been possible for the Japanese government to close borders, making an Olympic games impossible no matter what the legal rights of the IOC were.

To complicate the situation even further, even though the majority of the Japanese public didn’t want the games to happen in 2021, the Japanese government probably had different interests and motivations. Possibly, the government had more financial concerns about canceling the games than the public because the government was responsible for recouping $20 billion in investments. However, with the upcoming election, there was immense pressure to appease the public. Thus, the Japanese officials began using the IOC as a scapegoat. They intentionally left the power to cancel the games to the IOC, meaning that the IOC had the power to make decisions about the games. In April, Japanese Prime Minister Yoshihide Suga claimed to be powerless in the situation: “The IOC has the authority to decide, and the IOC has already decided to hold the Tokyo Olympics.” This was a direct attempt to have the games continue but limit the liability of the government in the eyes of Japanese citizens. Therefore, even though the Japanese government technically had the power to cancel the games, the IOC had all of the real power because the Japanese government deferred to its decision. The result of this process is that the IOC, the organization that receives funding directly from holding the Olympic Games, was given the sole power to continue, postpone, or cancel the games.

What options did the Olympic organizers have?

Olympic organizers were left with only a few options: continue the Olympics in 2020, postpone the Olympics, or cancel the Olympics. These three options are complicated by the smaller decisions of what (if any) COVID risk reduction procedures should be put in place.

Examples of COVID risk reduction measures include, but are not limited to barring spectators from the event, requiring testing of athletes, requiring masks, and requiring vaccinations. In the end, organizers decided to postpone the Olympics to 2021 and implement a variety of safety measures.

Option 1: Hold the Olympics at the normal time

The decision to hold the Olympics in July of 2020 could have posed a great safety risk to everybody involved and people around the world. Without the invention of the vaccine, there would have been a very limited number of ways to ensure the safety of all attendees, including athletes, media personnel, officials and fans. However, this could have lessened the financial burden on Japan by allowing the country to see a return on its investment sooner.

Option 2: Postpone the Olympics

Potentially, the decision to postpone the Olympics would have given time for the pandemic’s conditions to improve. It would also give global health organizations more time to manufacture vaccines, making the event safer for everybody involved. The possibility of a safer Olympics could have been better for the economy of Japan and all of the foreign investors involved. However, the decision to delay could also have given the pandemic a chance to worsen, making it more unsafe. Delaying the games also would have added additional economic burden because it would cost more to maintain the facilities, and stakeholders would have to wait longer to recoup investments.

Interestingly, after the final decision to postpone the games to 2021, several of these possible outcomes occurred. Fortunately, world health organizations were able to manufacture vaccines in time for the postponed date. Unfortunately, the state of the pandemic had also worsened with the proliferation of the more infectious delta variant.

Option 3: Cancel the Olympics

Canceling the event would have potentially been devastating to the Japanese economy, foreign investors, and the IOC. A full cancellation of the event would have meant a loss of 800 million in ticket sales.¹⁶ Also, the Japanese government would have completely lost all of their investments for the games, which totaled $20 billion. Additionally, while estimates vary, a full cancellation could have meant a 1.4% reduction in Japan’s GDP. It also could have been devastating to Japanese pride. Part of the allure of hosting an Olympic games is the pride of showcasing your nation to the world. A cancellation of the Olympic Games could have meant national humiliation to some people within the country. However, in terms of public health, a full cancellation would have undeniably been the safest option. Canceling the Olympic Games would have done the best to guarantee the safety of Japanese Citizens, everybody else involved in the production of the games, and people around the world. It also would have appeased Japanese citizens, who more and more wanted the event to be canceled. 

Description

The final decision was to delay the Olympics until July 23rd of 2021. When the time came, the pandemic still posed a substantial risk to the safety of those involved. Thus, the Olympic organizers implemented a variety of risk reduction measures in an attempt to keep people safe. Spectators were barred from watching in person, and athletes were required to wear masks while not competing, test frequently, and download a contact tracing app. However, athletes were not required to be vaccinated.

There was no perfect solution to the challenges of holding an Olympics during a pandemic. However, the IOC arguably allowed money, advertising deals, and corporate sponsorships to disproportionately influence their decision. Again, the IOC, the group in charge of the decision to hold the Olympics, had direct financial incentives to see the event through despite public health risks.

Additionally, the hierarchical structure of the IOC made it easy to ignore dissent. For example, even though a lot of organizational responsibilities fall on local organizing committees, those committees are bound to “the instructions from the IOC Executive Board.” This means that individual cities, like Tokyo, have little to no say in whether they hold the Olympics once they have been chosen as the host city. The local organizing committees’ focus more on just making the games run smoothly, and they do not have broader decision making powers. Because of this hierarchical structure, there have been a variety of complaints about the lack of inclusivity in the IOC’s decision making process.²⁰ The people who are most affected by the decisions of the IOC, don’t have a substantial part in the decision making process. In this case, even though Japanese citizens were arguably taking on the greatest public health risk in holding the Olympics, they were not a part of the decision making process. They had no voice in the IOC, and were arguably ignored by the IOC because of it.

Interventions

In the aftermath of the Olympics, we can start to unpack the emerging consequences of the decisions that went into the event. During and after the games, Japanese Covid cases rose dramatically. Around the time of the games, the new and highly contagious delta variant began to make its way through Japan. Although it was detected in mid-August, it is also possible that the variant was present in Japan before then. Thus, the spike is partially the result of uncontrollable factors, but research has not ruled out the Olympics as another possible cause of the spike.

Even though only 500 people directly involved with the Olympics tested positive, that doesn’t rule out possible larger and harder to define societal effects. For example, citizens might have interpreted the continuation of the games as a sign of safety. This could have encouraged citizens to gather and leave their homes more often even though the pandemic was just as dangerous as ever.

Japanese 7-day Average of COVID Cases Throughout the Pandemic

Arguably, the largest effect of the Olympics is frustration. The IOC and the Japanese government were in an unwinnable position and had to balance a variety of interests. In some ways, organizers did the best that they could. However, even if the IOC made the best decision possible with respect to the Olympics, they didn’t include the very people who would be affected by their decision in negotiations. In general, even if a good decision is made, people will not trust that decision if the decision making process was opaque and flawed. Therefore, when looking back on the decisions regarding the Olympics, the most effective rewrite of history would include a change in the IOC’s decision making process, not necessarily the final decisions that were made. The IOC should have a more transparent and inclusive decision making process, one that includes athletes and the citizens whose lives they are affecting.