- LA’s perceived reliability was crucial in securing IOC’s support
- Local organisers determined to stick to a strategy of financial caution
- $1.464bn has been set aside for venue infrastructure but bid will make use of existing LA venues
When Boston rather than Los Angeles was selected in January 2015 to enter the race to host the 2024 Olympics, there was a feeling amongst some US Olympic Committee (USOC) officials that the Californian city’s efforts would be hampered by a sense of “been there, done that”.
That fear of familiarity was forgotten six months later as Boston’s bid unravelled and the USOC turned to LA’s fiscally prudent proposal, which tallied with the International Olympic Committee’s (IOC) desire to rein in escalating hosting costs, as outlined in the Agenda 2020 reforms just months earlier.
Ultimately, LA’s perceived reliability was crucial in securing the IOC’s support at a time when the body was switching focus back to “tried-and-tested” hosts, according to Jon Tibbs, whose JTA agency supported the bid’s international PR and communications.
With reliability as the watchword, local organisers appear to be determined to stick to a strategy of relative financial caution ahead of the 2028 Games.
Even when the hosting budget projections were revised upwards in April, the $700m rise to $6.9bn (€6.2bn) was largely put down to unavoidable inflation, extra staffing costs and an enlarged $616m contingency fund, given that the Games will take place four years later than originally expected. Tokyo is reportedly splashing out $12.6bn on the 2020 Olympics, while a report by the French government last year said that the cost of hosting the Paris 2024 Games could reach €7.3bn, €500m more than anticipated, unless plans are revised.
However, LA is determined not to fall into the trap of many previous Olympic host cities by increasing the Games’ central budget to swallow up broader infrastructure developments. City Council members, have been in talks with local organisers about projects that could improve the Games experience, and are expected to present an updated plan in autumn 2020. But there are already separately-funded major initiatives in the pipeline that will boost LA’s hosting capabilities.
According to Mayor Eric Garcetti, who has said that “instead of trying to fit the city into the Olympics, we ask the Olympics to fit into the city”, increasing travel “options” will help to ease chronic traffic congestion by 2028, with LA drivers currently spending more hours in rush-hour jams than any other city in the world.
When the Games arrive, a new rail line connecting the city with the airport will have been built, as will a subway connection slashing the journey time between western LA and downtown to 20 minutes. LAX airport itself will undergo a $14bn upgrade, while other technological innovations are currently being explored, including people-carrying drones and “new underground modes of transport”.
However, at a time of significant public investment in infrastructure, as LA 2028 chairman Casey Wasserman has stressed, “no complex and costly construction projects or Games-related public infrastructure” will be required, with the bulk of events held at venues that already exist as part of a “realistic and fiscally conservative” budget.
So far, Tibbs thinks the organisers have succeeded in keeping Los Angeles citizens onside about the value of hosting the event.
“Opinion polls [for the Olympic and Paralympic Games in LA] have been consistently strong,” says Tibbs. “Minimising taxpayer involvement and being clear in explaining the benefits of the Games consistently will be very important in the coming years.
“LA’s approach of minimising Olympic infrastructure developments makes it infinitely easier to ‘sell’ the benefits of the Games to the public, especially as there are a number of vital transport improvements taking place across the city and southern California in parallel with the build up to 2028. However, I’m sure we will see the narrative build up surrounding the LA Games’ social benefits from Paris 2024 onwards.”
Of the latest Olympic budget projections, $1.464bn has been set aside for venue infrastructure, with University of California, Los Angeles serving as the Olympic and Paralympic Village and the University of South California lined up as the main press centre and media village. Other existing venues that have been earmarked for the Games include LA Memorial Coliseum, which hosted the 1932 and 1984 Olympics, as well as Staples Center, The Forum and Dignity Health Sports Park.
LA 2028 has consistently described the Games as “privately funded”, with income set to be generated by domestic sponsors, ticket sales, hospitality, licensing, merchandising and a “significant contribution [of $1.8bn] from the IOC”.
Such pledges are especially important in the context of heightened public scrutiny, with LA facing a spiralling homelessness crisis, partly due to a lack of affordable housing.
In June, the scale of the problem was revealed. Following a 16-per-cent year-on-year increase, those living in tents, makeshift shelters, cars or on the streets, as well a minority in official shelters, had reached 36,000; nearly one in every 100 people in a city that has just under four million inhabitants.
In November, the Los Angeles Times newspaper called on city leaders to tackle homelessness with the “same urgency and humanity that we will treat the visiting rowers and gymnasts” in 2028.
With the financial outcome of the Games set to be scrutinised closely it is vital that in parallel with a cost-conscious approach to hosting the event there is also a thriving commercial portfolio to ensure taxpayer dollars are not required to cover any shortfall.
However, even in the heart of a state that would have the world’s fifth largest economy if it were a sovereign nation, generating sufficient levels of commercial interest is not guaranteed.
Earlier this year, California lost the hosting rights to two inaugural multi-sport events in the space of three months.
In March, when the Global Association of International Sports Federations announced that the 2019 World Urban Games would be relocated from to Budapest, a squabble between the rights-holder and local organisers over the events on the sports programme was cited as a key reason. It was not disclosed whether local entrepreneur Dr Patrick Soon-Shiong, who had pledged to underwrite the event in LA, had convinced additional sponsors to help cover the costs, as initially proposed.
However, funding was unquestionably the issue when the Association of National Olympic Committees switched the 2019 World Beach Games from San Diego to Doha after the local organisers in the US city, located just a couple of hours south of LA, failed to generate the required private-sector financial backing.
The Olympics, of course, is on a different level, and renowned sports marketing expert Tim Crow is not alone in believing LA will “smash” its “conservative” forecast of $2.5bn for domestic sponsorship revenue, with $4bn seen as an achievable target.
Perhaps the most noticeable levels of investment in the coming years in relation to the Games will be through so-called ‘pre-legacy’ initiatives for communities.
“One of the advantages of being able to prepare for the Games so far in advance is that there can be ‘legacy’ benefits delivered ahead of 2028,” Tibbs says. “In that regard, Mayor Garcetti and the municipal authorities will have a well-thought-out plan, including investing more in youth sports across all parts of society.”
Against this backdrop, the work of the Los Angeles Sports and Entertainment Commission (LASEC) in collaboration with LA 2028 and the LA Sports Council, which acts as an association for the city’s sports teams and other organisations, will be crucial.
LASEC, which works in tandem with philanthropic organisations such as the youth-focused LA84 Foundation, focuses on events that “generate major economic and community impact, socially and culturally”, according to president and chief executive Kathryn S. Schloessman.
Famously, the 1984 Olympics generated an unprecedented surplus, totalling at least $225m. The LA84 Foundation alone benefited from a $93m injection, allowing it to provide equipment, coaching and facility upgrades to more than three million children.
As part of the deal that handed Paris the first of the two Olympics, the IOC agreed to contribute between $1.8bn and $2bn towards LA’s hosting costs, depending on commercial deals struck surrounding the event. As a result, LA 2028 has pledged to invest $160m annually into youth sports in the years up to the Games, with the IOC having provided a $180m advance on the $1.5bn in international revenues that are expected to be shared with the city.
LASEC, which is officially designated by Los Angeles Tourism to attract, secure and support high-profile events, is focusing on more than the bottom line, though.
“We actively bid for events that will garner significant media attention and impressions, thus raising the global profile of the destination,” Schloessman says.
On this point, an independent study of the NBA All-Star 2018 highlighted economic benefits of at least $116m for LA County, of which $90m was related to tourism.
The conservative approach underpinning LA 2028 does not mean the city is automatically opposed to expanding its plentiful portfolio of venues that host 11 professional major league sports teams.
The $350m, 22,000-capacity Banc of California Stadium opened last year as the new home of Major League Soccer’s Los Angeles FC, while the NBA’s LA Clippers franchise is hoping to move to a new 18,000-seat arena in Inglewood, just east of LAX, by 2024.
Renowned local architect Jon Jerde was also recently hired to brainstorm renovation options at the 92,000-capacity Rose Bowl in neighbouring Pasadena, northeast of LA. The stadium hosts the annual college American football Rose Bowl Game and staged the finals of the 1994 and 1999 men’s and women’s Fifa World Cups respectively.
Like the Rose Bowl, the under-construction SoFi Stadium is in the running to host matches during the 2026 FIFA World Cup, which will be co-hosted by the US, Canada and Mexico. The new stadium, due to open next summer, represents the most significant development within LA’s sports venue landscape for a generation.
The prospect of playing at SoFi Stadium lured the Rams and Chargers franchises to LA, ending more than two decades without an NFL presence in the city. Additionally, the 70,000-capacity venue will host the Super Bowl in 2022 and the College Football National Championship in 2023. Worth more than $30m annually over 20 years, the deal with digital personal finance provider SoFi has reportedly set a new worldwide benchmark for a stadium naming-rights agreement.
The opening of SoFi Stadium will be “an absolute game-changer”, according to Schloessman, who adds: “The new stadium has allowed us to go after events we were previously unable to bid on due to stadium requirements not being met by our existing venues.”
LA, with its Mediterranean-style climate, is an enticing destination for sports. In golf, the Los Angeles Country Club will host the men’s US Open for the first time in 2023 and the Ladies Professional Golf Association last year returned to LA for the first time since 2005. Meanwhile the public’s appetite for events was illustrated when the 2015 Special Olympics World Games attracted 10,000 volunteers and more than 500,000 spectators.
Given the legacy of the financially transformative 1984 Olympics in Los Angeles, there is already an acknowledgement of the role the Games can play in driving positive change within and beyond the city’s boundaries. However, establishing an events portfolio that helps rather than hinders the Games, as well as communities, is a challenge that requires a measured approach if the opportunity is to be fully grasped.