The California Legislative Analyst’s Office has issued an updated report on Los Angeles’ bid for the 2024 Summer Olympics, echoing its prior characterization of the proposal as “fairly low risk” but warning of potential snags.
“If Los Angeles is selected, hundreds of millions of state tax dollars will be on the line, and the city of Los Angeles will have much more on the line as the primary financial guarantor,” the Thursday report stated.
With L.A. competing against Paris to host the Games, bid leaders have proposed a $5.3-billion budget, predicting that all costs will be covered by revenues gained from broadcast rights, corporate sponsorships, ticket sales and other sources.
The bid seeks to avoid billions in construction by using existing venues such as the Coliseum and Staples Center, and by placing the often-costly athletes’ village at UCLA.
The private LA 2024 committee also has proposed buying extensive insurance and setting aside $488 million in contingency funds to cover any shortfalls.
Still, the state report said, “while the current Los Angeles bid appears to be low risk, it is easy to imagine that pressures could emerge to change one or more elements of the bid plan in future years.”
Competition requirements could change for numerous sports, forcing organizers to spend additional money on adapting venues, the report said. Construction and labor costs could increase over time.
The state analyst also noted that LA 2024 initially predicted selling 97% of available seats, equaling the reported sell rate at the 2012 London Games.
An independent review required by the International Olympic Committee ran a “stress scenario” with 20% less attendance at some events, concluding there could be a $40-million shortfall in the estimated $1.4-billion ticket revenue.
LA 2024 CEO Gene Sykes responded to the report, saying: “We appreciate the California State Legislative Office’s independent review of our bid, which expresses confidence in our work to ‘greatly reduce the financial risks that have plagued prior Olympics.’ ”
If IOC members ultimately award the Games to L.A. at a September vote, the city would have to sign a contract promising to act as a financial backstop. It is a significant guarantee, given that prior Olympics have run over budget, leaving large deficits.
Encouraged by LA 2024’s cost-saving measures, the City Council unanimously agreed to support the bid, and state legislators recently passed a bill allowing the governor to negotiate a backup guarantee of up to $250 million.
While the U.S. government does not underwrite Olympic Games — as the governments of other countries often do — the report noted that federal authorities traditionally have helped with security costs.
The state analyst concluded: “Every level of government, including the federal government, will have a stake in making the Los Angeles Games a success.”
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