26/03/2020 Article written by Tariq Saleh, Sportcal

Sportcal’s Tariq Saleh talks to The Sports Consultancy co-founder and managing director, Robert Datnow regarding the commercial impact of moving Tokyo 2020.

The postponement of this year’s Tokyo Olympics will have financial implications for all stakeholders which will “continue to be felt beyond 2021”, a leading sports events consultant has told Sportcal. Due to the coronavirus pandemic, the games have been pushed back and will take place “beyond 2020 but not later than the summer of 2021,” the International Olympic Committee announced this week.

The Japanese government set out a budget of 1.35 trillion yen ($12.1 billion) for the games and is believed to have invested 1 trillion of that on infrastructure for the major event, including the National Stadium and the Athletes’ Village. Due to the postponement, the overall budget for the games is likely to be higher and as a result, facilities and infrastructure will have to be secured for the alternative dates, and in the case of the Athletes’ Village, this is likely to lead to delaying commitments to private tenants.

There will also be a significant impact on broadcasters, sponsors and fans, who have all allocated money, time and resources for the Olympics this year.

According to Robert Datnow, co-founder and managing director of The Sports Consultancy, the UK-based strategic sports marketing consultancy, the commercial impact for Tokyo 2020 will be “complex” and is likely to result in further costs and a loss of revenue. He told Sportcal: “It is not just the city and the organisers who will be impacted, it is all of those people which have invested, such as the [IOC’s] TOP sponsors, the national Olympic committees and their sponsors, all those with travel arrangements and spectators who bought tickets. As with other postponements, the commercial impacts are complex and the scale of the games makes this more significant.

“Take broadcast for example, where rights and advertising have been sold for schedules across the summer all of which will now need to be untangled and new content secured, and commercials either postponed, re-purposed or shelved. Sponsors too will have planned and been ready to activate campaigns which will now need to wait.

“Then there is the athletes’ village, which was expected to house over 11,000 athletes where the organisers would have pre-sold property into the private sector as part of the legacy plan. Presumably, all of that transition will be put on hold because organisers will have to keep the athletes’ village available for the athletes next year.

“What happens now to all the stadia and arenas for the games? These will need to be maintained for an additional year, at additional cost. Although presumably, when the world begins to return to normal, these venues could host test events and qualification events which might generate some revenue to contribute towards mounting costs.”

He added: “Also, what do you do with the organising committee staff who are skilled, experienced and ready? Do you make some or all of them redundant now and recruit again later, or keep some or all staff on the payroll? There is no doubt a complex resourcing plan being worked out in the background.

“There are financial implications for everybody who has had some engagement with the Olympic and Paralympic Games and the wider sports community and the ripples will continue to be felt beyond 2021.

“That said, for all the financial implications, the loss of revenue, the complexities of broadcast and sponsorship, the disappointed athletes, the decision to postpone and prioritise public health, athlete health and the integrity of the games is right.”

According to local Japanese newspaper Nikkei, the country’s economy could lose up to 700 billion yen with the Olympics now delayed for a year. The postponement of the games has also had a direct impact on other events, notably the World Championships in athletics and swimming, respectively, which are due to be staged next year.

Both World Athletics and FINA, the aquatics governing body, have already stated they will be as flexible as possible when it comes to their respective competitions to ensure the Olympic Games can be staged at the optimum time in Tokyo.

Events across the entire sporting landscape are being forced to postpone because of the global coronavirus outbreak and some sports could struggle to find space on what will undoubtedly be a crowded calendar later this year and into 2021.

With next summer’s schedule set to feature soccer’s European Championships and the Olympics, other sports will be vying to fit around that.

According to Datnow, only events which meet particular criteria will survive and find its place on the sporting calendar, but believes it could present an opportunity to alter a saturated sports events market. He said: “All rights holders with events in the first half of the year face the prospect of postponing events and trying to find homes for them in the second half of the year or
next year. In these unique circumstances, there will not be enough suitable calendar space to accommodate all of the displaced events and not all events can therefore survive. I think what we will see is not a survival of the largest or the best funded events, but a survival of the most targeted and most relevant events.

“Events which are most targeted and the ones that work best for the group of investing stakeholders and their audience will survive. I wonder whether we will step back from this and think maybe less is more, maybe fewer, more concentrated events are better.

“Would one agglomerated single event which draws spectators in from across a continent to one venue at one time, better serve a host’s economic objectives to attract tourists to stay and spend, rather than perhaps having multiple touring events spread across a season? Calendars are crowded at the moment and there will be attrition in the short term.

“I think we might see fewer, more targeted events which is good for economic stimulation, better for the environment, because it involves people congregating less frequently, but in a more concentrated way, and staying and spending money in a local economy. It involves more concentrated media, and potentially higher value sponsorships. Fewer events would also create more of a seller’s market for events.”

With all major sports leagues and competitions grinding to a halt, some have turned to the virtual world in the past week to provide content and keep fans engaged.

The likes of Spanish soccer’s LaLiga and Belgium’s Pro League, motor racing’s Formula 1, motorcycling’s MotoGP, triathlon’s Ironman and Nascar, the US stock car racing series, have all launched virtual competitions to fill the void left by their postponed seasons.

Elsewhere, Fifa and Uefa, basketball’s NBA, American football’s NFL and ice hockey’s NHL are using archive content to engage with their audience.

Datnow expects sports which have embraced technology and found creative and innovative ways to reach their audience to thrive in the events marketplace. He added: “The events with the strongest fundamentals will survive. What I mean by that is, events will survive which have understood their spectator and consumer base and are being creative and innovative, and have taken time to connect with audiences through technology and digitally.

“Some, for example, are currently promoting archive footage, connecting players and fans on social channels and engaging through chat groups. The esports communities and the hybrid reality platforms (like Zwift and Peleton) are already engaging with competitors, fans and mass participation in a way which is suited to current self isolation, social distancing rules.

“It may be that as we emerge from the current crisis, people feel cautious initially about mass gathering and significant event-related travel and if that happens esports and tech platform sports will thrive.

“The opposite is also true. Sports which have not embraced technology and have not understood their fan base and are less engaging, will therefore matter less to spectators, broadcasters, sponsors and hosts.

“There will be knock-on effects for all sorts of events, through no fault of their own, later this year and in 2021. Despite good economic fundamentals, viewership, marketing value etc., they might fail simply because a higher priority event scheduled in the first half of this year, needs a space and displaces it. There just will not be space for everything in the calendar.”

Published with the kind consent of Sportcal.com