2024 Olympics in LA would pay their own way, mayor believes – Los Angeles Times
As Los Angeles moves closer to bidding for the 2024 Summer Olympics, officials said they can host the massive 17-day sporting event for $4.1 billion and offered to guarantee that the city will cover any cost overruns.
In an interview with The Times’ editorial board Monday, Mayor Eric Garcetti said he is pushing for Los Angeles to be named as the replacement for Boston, which dropped its bid amid financial concerns last month.
Garcetti and his team have proposed to spend $500 million less than what Boston had planned and expect to finish with a $150-million surplus by generating billions in broadcast and sponsorship revenue.
“I think it is right for this city. I think it’s who we are,” the mayor said. “I think we benefit from it economically.”
The U.S. Olympic Committee is expected to make a decision on a bid city by the end of the month and submit it to the International Olympic Committee by mid-September. Garcetti said he believes the USOC will choose his city.
This would not be the first time a potential bidder has promised to balance its budget. With the price tag for recent Olympics ranging from $14 billion to $51 billion, experts warn that expenses can add up quickly.
“Every single Olympics since the 1960s has had a cost overrun,” said Andrew Zimbalist, an economics professor at Smith College in Massachusetts.
That includes the 1984 Los Angeles Games, which saw costs rise but still turned a profit. This time, Zimbalist said, “I’d want to see what the initial plans for L.A. look like and I’d start out with a great deal of skepticism.”
Last winter, Los Angeles — which also hosted the 1932 Games — finished a close second in a USOC contest to name the American candidate for 2024.
Though Boston won, its campaign struggled from the start, facing opposition from residents who worried that its $4.6-billion budget might balloon and require a taxpayer bailout.
The Massachusetts capital withdrew after Mayor Marty Walsh waffled over signing a standard IOC contract to guarantee his city would cover any overruns.
On Monday, Garcetti and sports executive Casey Wasserman — who has worked closely with the mayor’s office — said a potential Los Angeles bid would be “dead on arrival” if it did not include such a pledge.
Their proposal hinges on earmarking less than $1.5 billion for 30 or so required venues.
Recent host cities have spent considerably more on stadiums and arenas. Los Angeles would rely instead on existing facilities such as Staples Center, Pauley Pavilion and a renovated Coliseum.
“Of all the cities in the world, L.A. has a real shot at doing this in a reasonable way,” said Victor Matheson, an economics professor at the College of the Holy Cross in Massachusetts. “They already have a collection of world-class venues, which cuts the cost way down.”
Garcetti said the proposal includes $200 million to repay the city for necessary services. There is a separate $400-million contingency fund that, if needed, would raise the overall budget to $4.5 billion but would not affect the surplus.
“I cannot eliminate risk,” the mayor said. However, he added, “On the one-to-five hot scale, one being the coldest, my personal assessment, for what it’s worth, is about a one.”
Host cities can generate as much as $5 billion through ticket sales, domestic sponsorships and licensing deals. They also receive a share of the Olympic movement’s global revenue.
The IOC is expected to give the 2016 Rio de Janeiro Olympics about $1.5 billion next summer. That contribution could increase significantly by 2024.
On the cost side, recent hosts have run up extraordinary tabs by attaching large infrastructure projects to the Games.
London’s $14-billion budget paid to renovate a downtrodden East End neighborhood for the 2012 Summer Olympics. Russian officials, in connection with the 2014 Sochi Winter Olympics, spent $51 billion to create arenas, highways and a mountain resort with luxury hotels.
“There’s zero percent capital improvement on things like roads,” Garcetti said of his proposal. “One of the reasons L.A. is seen so strongly by so many IOC members is we’re not building a transit system because of the Olympics.”
A whitewater course would be added to the Sepulveda Basin and a planned soccer stadium beside the Coliseum would be converted into a temporary swimming site.
Though such projects would be relatively inexpensive, Olympic experts said Los Angeles could face other challenges.
The organizing committee might have to partner with a developer to build the athletes’ village. Garcetti mentioned a parcel along the Los Angeles River as a potential site.
An entertainment company might be enlisted to help with a media center. Renovating the Coliseum would require a deal with USC, which is contractually obligated to spend at least $70 million on upgrades over the next decade.
Security could be an even greater expense.
Sydney organizers spent a reported $250 million to safeguard the 2000 Summer Olympics in Australia. Since the Sept. 11, 2001, terrorist attacks on the U.S., security for the Games has jumped to more than $1 billion.
Los Angeles organizers would probably seek help from the federal government.
“Certainly they would argue this is an event of national significance,” Matheson said. “Whether that would cover all of the bill or not is a big question.”
Olympic history is marked by financial horror stories. Montreal ran up a reported $1.5 billion debt in 1976 and the 2004 Athens Games went 60% over budget in a boondoggle that many believe contributed to Greece’s financial downfall.
There have also been successes, with the 1984 Los Angeles Games atop the list.
That summer, organizers relied on corporate funding — and existing venues — to keep costs under $550 million. Generating about $760 million in revenue, the Games finished with a surplus of more than $220 million.
“When you think about the Olympics, they can be a long-term investment,” said Robert Baade, a business professor at Lake Forest College in Illinois. “But they have to be done correctly.”
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