Debt-Strapped Japan Planning a No-Frills Olympics

  • Muto says IOC supports Tokyo effort to keep lid on spending
  • Tokyo has already scrapped plans for $2 billion stadium

Tokyo’s 2020 Olympic Games will be the first of a leaner type of competition that will limit spending on big-ticket venues to avoid alienating the public, Chief Executive Officer Toshiro Muto said, two months after debt-ridden Japan canceled plans for a futuristic main stadium.

The International Olympic Committee last year set out a new agenda that favors existing venues over purpose-built stadiums, as concerns mount in potential host countries over the burden of holding the event. Public anger over the cost of Tokyo’s flagship stadium swelling to $2 billion damped initial euphoria over the Games, prompting Prime Minister Shinzo Abe to scrap the design and seek new bids after trimming the budget by more than a third.

"It’s not going too far to say that Tokyo 2020 will be the first Games of its type," Muto, who heads the Tokyo Olympic committee and formerly served as deputy governor of the Bank of Japan, said in an interview at his office in Tokyo. "In Japan in particular, fiscal problems are very sensitive. Some people want this to be an opportunity to build stadiums as in the past, but if we keep on doing that, we will gradually lose public support. The IOC has a sense of crisis about this and we feel the same way."

Avoiding backlash

Japan is struggling to control a public debt more than twice the size of its $4.6 trillion economy, as social security costs spiral due to an aging population. With the risk of another recession as his Abenomics policies fail to boost growth in Asia’s second-biggest economy, Abe is looking to avoid a public backlash by keeping a cap on Olympic spending.

Muto is no stranger to frugality, having served as director of the budget bureau at the Ministry of Finance, which has long championed fiscal austerity in Japan.

Yoshiro Mori, the former prime minister who serves as president of the organizing committee that Muto runs on a daily basis, in July warned of the risk that costs could balloon to 2 trillion yen ($16.7 billion), about three times the original estimate.

Host nation’s typically face significant overruns on budgets. Spending for Russia’s winter Olympics in Sochi hit a record $51 billion.

Taming cost overruns could mean sidestepping Tokyo’s initial pledge to have almost all the competition venues within 8 kilometers (5 miles) of the athletes’ accommodation. Even temporary facilities in central locations may prove too expensive for public tastes, Muto said.

Public approval

"If you build a temporary venue, you may spend more than 10 billion yen and then end up tearing it down as soon as the Games are over," Muto said. "Would that meet with public approval?"

japan olympics
The construction site for a new stadium to replace the National Olympic Stadium.
Photographer: Kiyoshi Ota/Bloomberg

Abe has associated himself closely with Tokyo 2020, flying to Buenos Aires in 2013 to make the final pitch to the selection committee. Japan faced a second embarrassment this month, when the organizing committee was forced to abandon the logo it had chosen for the event after allegations of plagiarism. A panel was announced on Wednesday to start the selection process for a new emblem.

"It’s our duty to pick a new emblem as soon as possible," Muto said. "Based on the lessons of the last time, we will make the process as open as possible and make the public feel that they have had a say in the final stages," he added. The process should be complete in less than a year, he said.