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Decision looms for Tokyo 2020 organisers on domestic sponsors’ extra payments

The Olympic countdown clock resumes service in the Shinjuku district, in Tokyo, Japan. (Photo by Cassandre Bessin/Icon Sport via Getty Images)

The Tokyo Organising Committee for the Olympic Games (TOCOG) has not ruled out asking its domestic sponsors to make extra payments for the year leading up to the rescheduled Summer Games in 2021.

SportBusiness understands that the decision will be taken in the June-July period and will determine whether domestic partners will be asked to pay more and, if so, at what percentage of the annualised fee.

It is understood that domestic sponsors and their agencies have been contacted by Tokyo 2020 on the matter and are awaiting the official update from the organising committee. It is further understood from an industry source that one Gold Partner would withdraw from its partnership altogether if asked to pay a full annualised fee next year.

Other sponsors have disbanded their in-house Olympic teams and posted them back to more mainstream business lines, making decision-making more complicated.

When contacted by SportBusiness, Tokyo 2020 said: “We have not yet reached the stage of any concrete discussions regarding additional partner support, but we plan to consult with our partner companies going forward.”

The escalating costs of hosting the Tokyo Games, specifically the multiple costs incurred across the budget by the shift to next year, has heaped financial pressure on the organising committee.

According to The Nikkei Asian Review, organisers estimate that the delayed Games will add $2.7bn (€2.5bn) to the overall budget of $12.6bn before the postponement.

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Tokyo 2020 relied partly on the patriotism of local companies to reach the unprecedented figure of $3.3bn from their domestic sponsorship programme, which was handled by the Japanese advertising giant Dentsu.

The Financial Times reported earlier this year that some companies are resigned to losing money on their sponsorships and signed due to a combination of “aggressive marketing” and “patriotic duty”.

Putting the onus on domestic sponsors to make up any shortfall would run counter to the strategy of the IOC towards its TOP sponsors and the United States Olympic & Paralympic Committee in relation to its sponsorship portfolio. Both have committed to rolling on their contracts free of charge wherever possible.

One source close to the Olympic movement told SportBusiness: “The IOC has extended all contracts ending in 2020 to end 2021. IOC president Thomas Bach announced it and encouraged the rest of Olympic Movement to do same. For TOCOG, I guess this is a local Tokyo decision, but I’d be very surprised if they are taking a different position by asking the collective Japan Inc to step up again.”

Another stated that some Japanese brands, new to sponsorship protocols, may be “more malleable” and agree to a request.