We're five weeks away from the start of the Tokyo Olympics. Or 11 months late, depending on how you look at it.
The bean crunchers are running the numbers on what it means if the Games are still cancelled, which now seems unlikely, or go ahead with limited or no spectators. The organizers have given themselves until the end of the month to decide whether to hold the Games at full capacity, half capacity or with no fans at all.
There's a total economic benefit of ¥1.8 trillion (US$16.5 billion) if the Olympics go ahead, according to Takahide Kiuchi, the executive economist at the Nomura Research Institute. The organizers would take a ¥147 billion (US$1.3 billion) direct hit to their bottom line without any fans. There is a US$16.5 billion direct hit if they don't take place.
We already know that no international travelers will be allowed in. Japan essentially has maintained closed borders since the start of the pandemic, and it has been hard even for permanent residents with foreign passports to get back home.
That has already caused a ¥151.1 billion (US$1.4 billion) impairment to the bottom line, Kiuchi figures. International travelers would directly benefit Japan's economy with every yen they spend. Domestic fans may generate an economic benefit to Tokyo and the venue locations, but it is spending that comes at the cost of their hometowns.
There are qualitative calculations that are harder to quantify. Sponsors are questioning how publicly they want to support the Games at a time when surveys show that they are incredibly unpopular with the Japanese public.
What is the risk to your reputation of going big with publicity around your sponsorship? There are 47 major sponsors of the Games, contributing to the US$3 billion raised in sponsorship, and more than a handful have called in brand consulting companies such as Kantar, 60% owned by Boston-based Bain Capital, to answer that question.
An advertising executive working with one of the 14 global sponsors told the Financial Times that some companies have developed two advertising campaigns, one with heavy Olympic symbolism and the other without. They will decide at the last minute which to use, depending on sentiment at the time.
The athletic shoe company Asics ASCCY has been running an advertising campaign featuring athletes expected to compete at the Olympics. But there is scant reference to the actual event, with only a small rendition of the Olympic rings in a corner of the screen at the end of the commercial.
The electronics maker NEC (NIPNF) has been caught up in crosscurrents that shine yet another unwelcome spotlight on the behavior of senior Japanese government officials. Technology minister Takuya Hirai is heard on a leaked tape telling subordinates to use "threats" to the chairman of NEC.
At issue is the ¥7.3 billion (US$66.7 million) contract awarded to an NEC-led consortium to develop a facial recognition app for the Olympics in order to keep tabs on the health of foreign tourists and people staffing the Games.
After the government said it would not allow foreign visitors into the Games, it reneged on the contract. Instead, it forced the consortium to accept a ¥3.8 billion fee. NEC had already completed almost all the work on the app.
"I would die before placing orders with NEC" after the Olympics, Hirai said on the tape, according to The Asahi Shimbun. He said the company would be left out to dry if it complained.
The revelations of corporate coercion within government ranks come after a damning investigation into events at Toshiba TOSYY, which I covered on Monday. The trade ministry colluded with Toshiba executives to pressure investors not to vote alongside an activist fund demanding change at the electronics company.
That investigation uncovered a meeting between Toshiba's CEO and Yoshihide Suga, who is now Japan's prime minister but was its No. 2 official at the time. Suga recommended "aggressive" action against the activist investors and said "we can get them" by using the Foreign Exchange and Foreign Trade Act.
A poll in mid-May by The Asahi Shimbun showed that 83% of the Japanese public believes the Games should be postponed again or canceled. Only 14% of people said the Olympics should be held this summer and only 3% backed having stadiums at full capacity.
I don't believe the Japanese public is so hell-bent against the Games. There has been almost no public demonstration of this supposedly staunch opposition to the Olympics, no marching in the streets, no lobbying of the Japanese government or petitions. Indeed, the opposition only seems to come to light in public polls.
The opposition is also waning. A poll in early June by the Yomiuri Shimbun shows that 50% of respondents think the Games will go ahead, with 26% predicting they would take place in empty stadiums. Another 48% predict the Games will be cancelled.
How you ask the survey question seems highly likely to provoke a response. It may be that the hosting of the Olympics is somehow already associated with the causation of the COVID-19 pandemic, when instead the Olympics were one of the disease's earliest victims.
Let's not forget that Japan will continue to have COVID outbreaks, infections and deaths whether the Olympics go ahead or not. Canceling the Olympics does not mean you cancel the virus. And if the Olympics are not held this summer, what's to say the situation is going to be any better after yet another delay?
Japan experienced a second wave of infection in April and May, which has just eased. Peak infections were just as high in January, but the spring wave was thicker and more sustained. Thankfully, the second curve has now come back to pre-spike levels. This second wave had nothing to do with the Olympics but shares air time during media coverage, which links the two in our minds.
There's potential for a third wave whether the Olympics take place or not. Our "availability bias" encourages us to attribute any future increase in COVID cases to the Olympics, if they go ahead, but the virus is already knocking around in Japan. It is not as if the Olympics would be introducing the disease into virgin territory.
The job, and it's a serious one, is to control the Olympics so that they can occur in as much a COVID bubble as possible. The Euro 2020 soccer tournament is currently going ahead, even with the occasional positive test from a player, who is sent home. Wimbledon will hold its final in front of a full center court, according to current plans.
Japan, for a country with a 125 million population that is the same size as Mexico, has done an excellent job of curbing COVID-19. Its total infections are on par with Hungary or Jordan, nations that are a fraction of the size. It has kept infections per capita commendably low, at 616 cases per 100,000 people; the rate is 16 times higher in the United States, at 10,082 per 100,000.
The thing Japan has not done so well with is vaccination. It is well behind the curve for a nation with one of the world's strongest pharmaceuticals industries. Japan has administered only 20 doses per 100 people, which is below the global average of 31. Only 5.2% of the population is fully vaccinated, compared with 44% full coverage in the United States.
That also does not have anything to do with the Games and is a result of slow government rollout. Speed up the vaccination program and the threat of a third wave in Japan will recede. And the Games can go ahead, as the great cultural spectacle and celebration of human achievement that we could surely use right now.