On Thursday the Los Angeles 2024 Olympic and Paralympic Games bid received a critical (USD) $250 million funding guarantee when California Governor Jerry Brown Jr. approved a law that would provide state financial support should the city organize the Olympic Games.
California’s “Olympic Games Trust Fund” was established by the legislation and would begin payments in the event of any cost overruns while preparing for the Games, and only after LA 2024’s “significant private insurance payouts have been exhausted and the City of Los Angeles contributes $250 million,” a statement by the bid explained.
“The state’s financial support is consistent with its longstanding practice of supporting California bid cities.”
The LA 2024 bid committee has added a $400 million line-item in its budget for contingencies and will spend $150 million on insurance premiums to protect its bottom line. If these aren’t sufficient, the taxpayer bailouts by the state and city will follow.
The bid says it will accumulate a $161 million surplus from the Games estimated to cost about $4.7 billion. Organizers expect to receive $1.5 billion in television and international sponsorship revenue and $1.4 billion in domestic sponsorship revenue. They’ll also receive $1.7 billion in payments from the International Olympic Committee (IOC) as part of the host city agreement.
An Oxford University study released in July revealed that the median cost-overrun experienced by Olympic Games studied from between 1960 and 2016 was 83 per cent.
But L.A. officials contend that the California bid is based on the use of existing venues allowing them to offer a low risk proposal, and that a large overrun is unlikely. The 1984 Games in Los Angeles were profitable and left a financial legacy that was the basis of a foundation that supports sports programs in Los Angeles today.
LA 2024 Chairman Casey Wasserman said, “the state’s financial support underscores the united support behind bringing the Games back to LA, but also confidence in our city’s ability to host a fiscally responsible Games that is high-tech, low-risk, and sustainable and would allow us to spend the years leading up to 2024 focusing on creating the best possible experience for athletes, fans and all other members of the Olympic family.”
LA Mayor Eric Garcetti added “We are confident that we can bring a successful games back to the U.S. without risk to our taxpayers. Today, thanks to the leadership of Governor Brown, State Senate Pro Tem Kevin De Leon and Speaker Anthony Rendon, this legislation gives our LA Olympic and Paralympic bid even stronger financial protections – and more importantly, the strong support of our state’s leadership.”
LA 2024 has also received the endorsements of President Barack Obama and First Lady Michelle Obama, while a bipartisan U.S. Senate and House resolution supported the bid in July 2016. A poll conducted in January and February by Loyola Marymount University showed that 88 per cent of Los Angeles residents supported LA 2024.
Los Angeles is competing against Budapest and Paris to host the Games in 2024 – with Rome expected to exit the race officially Friday after losing the support of city council. The IOC will elect a winner September 13, 2013.