With COVID-19 keeping fans from attending the rescheduled Tokyo Olympics, reinsurers will likely have to pay up $400 million for ticket and hospitality refunds, according to Fitch Ratings.
Given that the projected $300 million to $400 million in projected fan refunds represents only about 10% to 15% of the amount reinsurers would have had to allocate if the games had been canceled, however, Fitch said that the impact on reinsurer earnings should be limited. Organizers had expected to generate some $800 million in revenue from ticket sales.
The rating agency estimates that the total insurance cover for the Tokyo Games, which were originally scheduled to take place last summer, is about $2.50 billion. About $1.4 billion was taken out by the International Olympic Committee and the Tokyo Organizing Committee, while another $800 million was expended by TV broadcasters. The remaining $300 million in coverage was taken out by sports teams, sponsors and hospitality providers.
The IOC, which derives almost three-quarters of its revenues from TV rights deals, and Japanese organizers had tried to allow for some spectators in the stands amid public health precautions, first barring only international fans and last month announcing venues would be limited to 50% of capacity, with crowds not to exceed 10,000. But with COVID-19 cases again rising, the Japanese government issued a state of emergency effective July 12 through Aug. 22 that prohibits any fans from attending competitions in Tokyo and surrounding areas.
According to the Johns Hopkins resource center, Japan has had over 820,000 COVID-19 cases and more than 14,900 deaths since the pandemic began. Just under 18% of Japanese citizens are fully vaccinated.
Many Japanese people, in surveys, have expressed opposition to the Tokyo Games taking place at all.
NBCUniversal Media LLC, which is slated to pay the IOC $1.4 billion for multi-platform rights to the Tokyo competition, will begin its coverage of the softball competition July 20; women's soccer and softball July 21; and men's soccer, softball and rowing July 22. The opening ceremony is scheduled July 23, with the closing ceremony on the docket for Aug. 8.