Tokyo Olympics Economic Losses Without Fans Will Be ‘Huge’, Says Japanese Businessman

Hong Kong / Tokyo (CNN Business) – One of Japan’s most prominent business leaders says the Olympics are losing their commercial value.

Suntory CEO Takeshi Niinami told CNN Business in an exclusive interview on Monday that his company decided not to sponsor the upcoming Tokyo Games, saying it was “too expensive.”

“We thought about being an Olympic partner … but the economy didn’t match,” said the head of the Japanese beverage giant, which is home to brands like Orangina and Jim Beam bourbon.

Rather than sign as an official sponsor, Suntory drew up another route to increase its visibility during the Games, which begin this Friday: The Tokyo-based company planned to link up with restaurants and bars around sports venues to promote its drinks and open various establishments to serve your products exclusively.

“I thought this occasion would be a great showcase for us,” Niinami said in Tokyo. “I was expecting a lot of viewers to come from abroad.”

The organizers’ recent decision to exclude spectators from the Games venues in Tokyo on public health grounds scrapped those plans.

“The economic losses will be huge,” Niinami said, estimating that Japanese companies could have enjoyed a roughly 10% increase in sales if the fans had allowed themselves.

The effect of an Olympic Games without spectators

Not having domestic viewers could cost Japan’s economy 146.8 billion yen ($ 1.3 billion), according to an estimate by Takahide Kiuchi, an economist at the Nomura Research Institute.

In a June report the institute noted that “much of the expected economic benefit from the Tokyo Games disappeared in March, when it was decided to ban foreign spectators from traveling to Japan,” a measure that Kiuchi projected had already caused US economic losses. $ 1.4 billion.

“This is the moment [cuando] we have to think: what is the value of the Olympics? “said Niinami.” I think the Olympics have been losing [su] value”.

The Tokyo Games have been highly controversial, with countless protests to cancel the event and thousands of volunteers dropping out.

Despite Niinami’s close ties to the Japanese government (he is an economic adviser to Prime Minister Yoshihide Suga), the executive is not shy about criticizing him. “I don’t know why the Games were not delayed,” he said, noting the delay in launching vaccines in Japan and the ongoing heat wave in Tokyo. “[Ellos] they should be postponed … at least two months. “

A great bet

This month, Japan confirmed that the Olympic Games would be held in a state of emergency due to the coronavirus pandemic.

That news was a serious blow to those, like Suntory, who had bet on increased consumer spending. So far, more than 60 Japanese companies have spent a record $ 3 billion on this year’s Olympics, and now many of them are concerned about return on investment.

When asked if he thought the Olympics could still give Japanese companies a boost this summer, Niinami said: “I believe it less and less.”

Some companies have had to significantly reconsider their participation.

Akio Shinya, managing director of Tokyo Skytree, the world’s tallest broadcast tower, told CNN Business that his company had deliberated last year “whether we should become a sponsor under this circumstance.”

Though he later decided to commit, he has since been forced to cancel several events, including a torch relay on the skyscraper’s observation deck intended to “lift spirits for the Olympics.”

“Due to covid-19, the time is not right,” Shinya said. “He hadn’t been in the mood to celebrate such an elegant festival.”

An unpopular Olympics

Nearly 80% of people in Japan say the Olympics should not go ahead, according to an Ipsos Mori poll released last week.

Companies have been aware of these sensitivities. This week Toyota, one of the Games’ biggest sponsors, said it would not launch any announcements related to the event in Japan, choosing instead to run “regular” commercials.

According to the North American division of the automaker, the decision was made taking into account “the situation of covid-19” in the country.

Michael Payne, former director of marketing for the International Olympic Committee, acknowledged the tough battle of the companies. “There’s no point in sugarcoating. You know, this is not an ideal situation,” he said.

But Payne, who created the global sponsorship program for the Olympics some four decades ago, predicts that companies could “still be pleasantly surprised by the potential inherited benefit from these very difficult Games.”

“There is still a significant opportunity,” he said. “I wouldn’t rule it all out just yet.”