California’s Legislative Analyst’s Office (LAO), a bipartisan group tasked to provide fiscal and policy advice to the Legislature, says Los Angeles’ bid for the 2024 Olympic and Paralympic Games exposes taxpayers to minimal risks but offers little long-term benefits to the State’s economy.
This assessment was made available in a study released Thursday that was initiated due to the state’s (USD) $250 million underwriting against any deficits generated through organizing the bid.
The report did conclude that short-term Games time financial benefits would be highly likely as revenues earned from visiting spectators, broadcast revenues, ticket sales and sponsorship would flow into California as a result of hosting the Games. However long-term financial gains would be less likely due to the strategic Games concept being proposed.
But that’s not necessarily a negative for the bid.
In order to build a strong plan that complies with the International Olympic Committee’s (IOC) Agenda 2020 reforms, LA 2024 has proposed a concept that reuses exiting venues or leverages temporary structures instead of constructing costly new sport and accomodation facilities that usually inflate the overall price and risk of organizing the Games. But as a result, there will be a minimal new physical legacies from which to generate future financial gains.
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The report also identifies that there are no large infrastructure projects connected with the bid and “accordingly, for Los Angeles, the Olympics probably would not generate much or any long-term economic gain related to new infrastructure.”
The report also explained that Los Angeles wouldn’t be able to benefit from the additional branding and exposure typically connected with hosting the Games because the world renowned city is “already well known to people and businesses all over the world because it has hosted the Olympics before and appears constantly in films and on television.”
The LAO report was generally confident that the sound planning of the project meant that the allocated state funding may not even be required to fund the bid.
“Compared to many past Olympic bids, the current proposal by the LA 2024 organizing groups is a relatively low risk one,” the LAO report explained.
It went on to identify that the endeavor is not risk-free.
“There is, however, some chance that city and state taxpayers could be called on to provide additional funds, the report said.
“Today, the Olympic and Paralympic Games are ‘mega-events’ even for the world’s largest cities. Mega-events are among the most complex events to organize: huge undertakings that require years of preparation, billions of dollars, and involvement by every level of government.”
“Many Olympics have experienced large venue or infrastructure cost overruns and delays, and some have had disappointing ticket sales. While a Games plan can try to minimize financial risks, there is probably no way to completely eliminate these risks.”
The report concluded that “the low-risk financial strategy of the bid greatly reduces the risk that the Southern California economy will bear large, long-term taxpayer expenses related to the Games.”
“For these reasons, under the current bid plan, the long-term economic effect of the 2024 Games probably would be close to neutral.”
The report suggested to the California legislature, should L.A. win the Games, to keep tabs on spending.
“We recommend that the Legislature stick by the firm stance reflected in SB 1465, which provides support for the Games, but strictly limits the state’s financial exposure to Games deficits. We advise state leaders to consistently make it known that no additional funds beyond those committed in SB 1465 will be provided.”
Last month Rome’s bid for the Games was suspended after Mayor Virginia Raggi refused to back it due to the financial risks involved with the project. She said supporting the bid would be “irresponsible.”
Last year Hamburg’s bid was abandoned when taxpayers rejected it in a city-wide referendum.
Los Angeles is competing among Budapest and Paris to host the Games. The IOC will elect a winner September 13, 2017 in Lima, Peru.
