The Public Resources Subsidizing the LA 2028 Olympics, An Event Designed for Private Profit

The organizers of LA 2028 claim it will be a privately funded Olympics. They claim a combination of sponsorships, ticket revenue, and licensing and merchandise revenues will be enough to cover the budget — currently a whopping $6.9 billion. However, as has often been the way at past Games, a number of expenditures are not included in the official budget. Several of these expenses appear set to fall on the public. Moreover, the public has already subsidized infrastructure projects that the Olympics will rely on, and may subsidize more in the coming years. The lists below are an in-progress attempt to document a few ways in which the 2028 Olympics will be funded by the public, even if — and it’s a big IF — LA28 balances its official budget. (If the official budget goes over or expected private revenues fall short, taxpayers are on the hook for billions more.) This information is hard to piece together, because Olympics spending is deliberately opaque and messy. Let us know what we’re missing and we’ll update the list!

But first, why it matters: 

When a city spends money on the Olympics, that’s money that it cannot spend on the actual needs and priorities of its residents. But not only do public Olympics expenditures threaten the city’s ability to fund basic social services — they also subsidize private profit. Already wealthy and well-connected — frequently multinational — companies in the fields of construction, real estate development, security, events consulting, media, and marketing tend to bring in windfalls. NBC made an estimated $250 million in profit on the Rio 2016 Olympics. In LA, the Olympics organizing committee has awarded consulting and marketing gigs to multiple companies owned by LA28 board members, as in the case of the $1.55 million social media and content contract given to Chairperson Casey Wasserman’s 247 Group. Who are these Olympics really for, if the public subsidizes an event that generates lucrative returns for a select cadre of powerful corporations? 

Direct costs

• The labor time of city officials, including staffers at the Mayor’s Office, the Chief Legislative Analyst’s (CLA) office, the City Administrative Office (CAO), City Council offices, and LAPD / LA Sheriff’s Department, among other offices in LA and neighboring cities. 
  • “We’ve been meeting multiple times a week for several hours a day,” CLA staffer John Wickham told City Council at a September meeting about the Games Agreement.
  • Beyond the monetary costs for city staffers’ labor time, imagine what ongoing crises in Los Angeles could be better addressed if city staffers were focused on them, instead of the Olympics. 
  • Cost: UNKNOWN

• Travel costs for LAPD Chief Michel Moore’s week-long trip to Paris “to develop organizational security plans in preparation for the Los Angeles 2028 Olympics.”
  • Cost: $2,474.12 

• Event security costs. In theory, the cost of securing this designated National Special Security Event (NSSE) falls on the federal government. While LA28 has refused to offer an estimate of security costs, since Athens spent $1.5 billion on Olympic security in 2004, security costs have hovered between $1 and 2 billion. 
  • Cost: $1-2 billion

• The acceleration of transit projects. Mayor Eric Garcetti’s Twenty-eight by ‘28 transit initiative identifies twenty-eight projects for completion by 2028. Some were already on track to be finished by 2028, and some already have allocated funding. Even as of the policy’s launch in 2017, eight projects required an additional $26.2 billion to be completed on an accelerated timeline by 2028. Now, in 2021, some of the projects that were originally slated to be done by 2028 are behind schedule and over-budget. So even more than $26.2 billion may be required to meet the arbitrary deadline set by Garcetti. While the Olympics is not the sole reason for these projects, it is theoretically the sole reason for their acceleration and costs associated with meeting the deadline.
  • $1 billion of this appears to be coming from the State, via Newsom’s California State Budget 2021-2022 which includes a line item “to deliver critical projects in time for the 2028 Olympic Games.”
  • Cost: $26.2 billion

Additional proposed costs

• Expansion to LA Police Department. The LAPD claims it needs an additional 3,000 sworn officers by the time 2028 rolls around. As a long-term expansion to the force, this would likely not be covered by the federal government’s event security budget.
  • Cost: approx. $240 million per year (with $80,053 average salary)

• Expansion to LA Sheriff’s Department. The LASD has been campaigning for an additional 500 deputies to be ready for the Olympics. As a long-term expansion to the force, this would likely not be covered by the federal government’s event security budget.
  • Cost: approx. $39.6 million per year (with estimated $79,200 average salary)

New permanent sports venues

• Belmont Beach and Aquatic Center. Long Beach plans to build the Belmont Beach and Aquatic Center on the site of a former and now-demolished aquatic center to the tune of $85 million from the city’s public Tidelands Fund. LA28 has apparently “expressed potential interest in hosting diving at the facility,” according to Acting City Manager Tom Modica.
  • Cost: $85 million

• The World Skatepark. Huntington Beach’s city council has proposed “putting $750,000 of the city’s American Rescue Plan funds towards constructing The World Skatepark,” as part of its effort to bring surfing, skateboarding, and BMX events to Huntington Beach. American Rescue Plan emergency funds are given to cities from the federal government for the stated purpose of direct relief and investment to support the economy’s recovery from the devastation wrought by Covid-19.
  • Cost: $750,000

Public funding for Olympics-adjacent infrastructure

• Exposition Point. 32 low-income families were forced from their rent-stabilized units to make way for this planned complex of hotel rooms, retail and office space, student housing, and other residential apartments, previously known as “The Fig.” In June 2018, LA’s City Council voted to explore public subsidies for the project, “citing the need for hotel rooms to accommodate tourism and the future Olympic and Paralympic Games.” The project was cleared for $103 million in tax breaks in 2019.
  • Cost: $103 million

• Fig + Pico Hotel. While making its case for tax breaks, the hotel’s developers — Lightstone Group — also “promise[d] to have rooms available for the 2028 Olympics.” The City granted the project $103 million in subsidies.¹
  • Cost: $103 million

• Inglewood People Mover. Unlike other transit projects in LA, including those bundled into the Twenty-eight by ‘28 initiative, the Inglewood People Mover appears designed primarily for visitors to Inglewood’s sports venues. As 2urbangirls notes, “the people mover doesn’t connect to anything south of the Clippers arena, so the only conclusion you can draw is it’s sole purpose is for the Forum, SoFi Stadium, and the arena.” So it deserves special attention when we think about Olympics costs. Estimated at $1 billion, the project has reportedly secured over 300 million dollars of funding from the State and from the county’s Measure R Highway Funds. Inglewood is also seeking to raise local taxes (real estate transfer and transient occupancy taxes) to contribute to funding the project. 
  • Cost: $1 billion

Existing Olympics infrastructure with public funding

*It makes sense that this category of items is not counted in the Olympics budget. We include it here to show the additional ways the public has already subsidized the 2028 Olympics and any private profit to be made from them.

• Staples Center. Developer AEG received $70 million in public subsidies.
  • Cost: $70 million

• LA Live. In 2005 AEG was granted up to $270 million in public financial assistance over 25 years for the LA Live complex, which includes the Marriott-Ritz Carlton hotel where IOC members will stay during the 2028 Games.¹  
  • Cost: $270 million

• [more cases coming soon]

Potential cost overruns

• If Olympics costs go over budget, or if the private LA28 organizing committee fails to secure its planned revenue figures, the City of LA (aka LA taxpayers) is on the hook to cover the difference between revenue and costs. 
  • The Olympics have overrun their estimated budgets by an average of 172 percent since 1960. At this rate, LA’s $6.9 billion Olympics budget would grow to approximately $18.8 billion by 2028, leaving the city with debilitating debt. Olympics organizers point out that less of LA’s budget will go to venue construction or maintenance — a category notorious for ballooning costs — compared to other Olympics. But LA has nonetheless budgeted $1.5 billion for venue infrastructure costs. Even if just this portion of the budget increases by 172 percent, the overall costs will increase by $2.57 billion, greatly exceeding the budget’s $610 million contingency fund. 
  • Cost: Unlimited

This list is not exhaustive! What are we missing? Did we get anything wrong? Let us know in the comments or @_olympicswatch on Twitter

Endnotes

1. A 2018 report by LA’s City Controller analyzed eight major development projects that the City Council had approved for tax breaks between 2005 and 2018, including the LA Live hotel and the Fig + Pico hotel. The report showed that these projects’ developers had received around $1 billion in combined public subsidies, and argued that “there has not in all cases been adequate evidence” to ensure the tax breaks were needed or good for the city.