LA Olympics plan facing backlash over same overrun guarantee that sank Boston’s bid

Los Angeles Mayor Eric Garcetti said last week that he’ll sign the International Olympic Committee’s pledge to cover any cost overruns if the 2024 Olympics are held in his city, saying any bid would be “dead on arrival” without it. The L.A. Times editorial board, for one, is displeased:

[U.S. Olympic officials] know they need L.A. more than L.A. needs the Olympics.

But does Garcetti know this? We’re not sure. Last week, Garcetti said he’s pushing hard to be the American bidder for the Games, and that’s good. But he wouldn’t even consider playing hardball when it comes to the requirement that the city guarantee to pay any cost overruns. That’s not so good.

The mayor and his Olympic advisors say Angelenos shouldn’t worry, as Bostonians did, about paying for cost overruns because there won’t be any. Period. The city just can’t lose, he said.

Where have we heard that before? Oh yes, Montreal’s mayor said something similar just before his city incurred $1.5 billion in debt for staging the 1976 Summer Games.

Now, there are indeed some reasons to hope than an L.A. games could avoid some of the worst of the red ink that has befallen other Olympics: The city does have a lot of existing venues, for starters. Still, the number of Olympics that haven’t lost money is so vanishingly small — the only one in recent memory is the 1984 Olympics in L.A., which notably got an exemption from the overrun guarantee — that it’s worth being cautious. And with fewer and fewer cities willing to take on the risks of being a host city, this might well have been a good time to call the IOC’s bluff on this.

That’s apparently not going to happen, at least not this time around in L.A. (Unless the L.A. city council does an end run around the mayor and gets a public vote banning any public spending on cost overruns, as it did before he 1984 games.) Still, it’s interesting to see pushback growing to the IOC guarantee requirement — first in Chicago over its bid for the 2016 games, then with Boston, and now in L.A. It’s likely to be a while before the world runs out of mayors more eager to be the politician who landed the Olympics than the politician who stood up to them, but as I said in my own L.A. Times op-ed last month, the Olympics are supposed to be about chasing big dreams, right?

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14 comments on “LA Olympics plan facing backlash over same overrun guarantee that sank Boston’s bid

  1. If I recall correctly, Atlanta in 1996 did net a profit, though I believe the IOC felt the city did it “on the cheap” and were displeased with it as a result.

  2. The Atlanta organizing committee broke even, I believe. Atlanta as a city lost about a billion dollars, according to best estimates.

  3. Neil, Do you have documentation about the $1B loss for Atlanta in 1996? I am not questioning your number, just wondering if you have ssomething I can use as proof when discussing this with others.

  4. Larry Keating at Georgia Tech did the $1B estimate. I probably have his paper buried in a folder somewhere if you need me to dig it up.

  5. There comes a point where the IOC needs to place an Olympics in the U.S. or they’ll lose us as an audience. There aren’t a lot of sports in the Olympics that U.S. Citizens are huge fans of, and our interest only seems get spiked when we hold an Olympics. Yes, we do get more excited every Olympics, but there’s something different when it’s your own country.

    As the IOC gets more money from the U.S. via broadcasting and other sponsorships, if they turn their back on us too much longer, they risk Uncle Moneybags losing interest. We should use that leverage and say ‘50% of that IOC money goes to whatever US city we choose for the venues, or we never bid again.’ Let China, Russia, Kazhakstan or wherever host all the future Olympics.

  6. You would think if there’s ever a time where it would be easy to play a little hardball, this would be it.

  7. So the way I see it your costs fall into 3 categories: 1) venues 2) infrastructure/housing 3) event staging/security. Then your revenues come from 1) ticket/merchandise sales 2) sponsorships 3) broadcasting fees. I think we can all agree that in many cases venues that are built specifically for the olympics will largely be useless when the games are over. You have your rare Turner Field that was turned into a baseball stadium that they got 20 years of use out of after the games ended. However no one is really going to need a swimming pool with thousands of seats for spectators etc. But if you’re a city like LA that has a lot of venues already in place there probably won’t be as much you actually have to build. It second category of infrastructure and housing, it comes down to how much of it are you only building for the games that you will never need/use again and how much of it is stuff you need and the Olympics is your excuse to build it and gives you the mandate to get it done in a certain timeframe. Vancouver built a highway for the 2010 games. If you include the entire cost of the highway in the cost of the games it does swing the numbers but its not like they didn’t need the highway. When South Africa bid for the 2004 game part of their case was the fact that they had a housing shortage and the games would defray the costs of that.

    I think however the analysis will vary from case to case. If staging costs are X and venues 2X and infrastucture/housing is 4X (7X total), and your total revenues from all three sources are 5X Neil would write a bunch of sarcastic posts that Host City/Country was so stupid for putting on the games that lost 2X. However, others would argue that “well the city got 4X worth of infrastructure and housing out of it” Both can be right in that case.

  8. No, I wouldn’t count costs of housing/transit/whatever that later serves as a public asset as a loss from the Olympics. Velodromes, though, or event security are a different story, since you can use those for anything once the games are done.

  9. Sounds to me like LA needs a new, state of the art stadium for the Olympics, with the public on the hook for all costs. Take the overrun pledge, LA, cuz that sucker’s gonna cost at least 2 bil and there’s a whole lot more Olympic infrastructure you’ll need to be payin’ for after that!

    This neat trick will solve all those confounding stadium funding problems out there by indebting the taxpayers forever and giving the NFL the stately palace it needs to finally arrive back in LA. By 2025 or so we ought to have finished leveraging public stadium cash out of just about every NFL city in North America, so we won’t need LA as a tool anymore.

  10. @PiggyWilf – everything I read about LA’s bid the main stadium will be the LA Memorial Coliseum for the third time.

  11. So, after all that money that went into ripping out the track in 1991, they’re gonna turn around and put one back in?

  12. Sierra – as opposed to spending over a billion dollars on a new building? Yes. You would just have to have the Olympics early enough so that they can get it back into a football configuration for USC.

  13. @Aqib – Or just pay USC to deal with it for a year (likely through upgrades to the Coliseum) and take it out the year afterwards.

  14. Has the USOC run out of cities to represent the U.S. to bid for the 2024 summer Olympic games?

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