Can Los Angeles Beat the Olympics’ Cost Curse? – CityLab

Last month, Los Angeles was chosen as the U.S. Olympic Committee’s official bid for the 2024 Summer Games after Boston, the initial selection, revolted over taxpayers potentially picking up a piece of what is often a very large bill. The group No Boston Olympics protested, public opinion was awfully sour, and Mayor Martin Walsh ultimately rejected backstopping the games’ budget, declaring, “I refuse to mortgage the future of the city away.” 

Promotional materials from LA24, the city’s Olympic bid committee, are wrapped in the sunny and determined glow of California optimism, and have so far not prompted a visible, organized opposition. Still, there is concern that the city would most likely be on the hook for typical cost overruns. In a letter to city council members, City Controller Ron Galperin urged officials to “safeguard Angelenos and our city government from possible losses—and to avoid placing our city in a position wherein we might have to indemnify the U.S. Olympic Committee or any other entity from losses they might incur.”

The City Council has until next year to agree to the cost overrun guarantee contained in the host city contract, according to Mayor Eric Garcetti’s office. Until then, they will be making the case that L.A. is the best, most prudent American venue for the Olympics. And they have quite a case to make.

The city has already hosted the Olympics twice, in 1932 and 1984. That means that it can use existing Olympic infrastructure such as the Memorial Coliseum, which opened in 1923 and hosted both L.A. games, along with newer venues like the Staples Center, which opened in 1999 and is home to the Lakers, Clippers, Kings and Sparks. More to the point, the city has already pulled off the rare feat of putting on a profitable Olympics. LA24 is making the city’s existing infrastructure a key part of their pitch, and say they are in a good position to pull of a profitable games again.

“LA 2024 is committed to hosting a fiscally responsible Games,” says LA24 spokesperson Jeff Millman in an email. “If selected, we would exercise careful control over the budget. And with the 1932 and 1984 Los Angeles Olympic Games both producing surpluses, we have proven that we are ready for that responsibility.”

LA24 pledges to somehow surmount the city’s legendarily horrible traffic and continue beefing up its paltry mass transit. Notably, it hopes to expedite plans for a major Purple Line subway extension to West L.A. and a train connection to LAX airport. As high as these hurdles might seem, L.A. has done it before: In 1984, writes Henry Grabar in Slate, a massive and “specially devised Olympic bus network” transported “spectators, athletes, and the press … which were given special priority on local roads.” This time, LA24 has planned on an “Olympic Route Network” of dedicated-lane corridors “that will make travel to nearly all the venues 30 minutes or less.”

But perennial Olympic skeptics, who have a track of record of being right, aren’t yet assuaged. Plans to locate the Olympic Village on a Union Pacific rail yard, for one thing, could prove costly and environmentally complicated.

“I think they still might be able to get it done, but at this point it’s a big question mark,” says Smith College economics professor Andrew Zimbalist, the author of Circus Maximus: The Economic Gamble Behind Hosting the Olympics and The World Cup.

Some Angelenos’ fond memories of the ’84 Games might be tempered by any portent of fiscal doom. The City Council has yet to sign on to the cost-overrun guarantee which, according to Garcetti’s office, is a necessity. After all, Olympic cost overruns are the norm, and they often create big fiscal trouble for cities. In Athens, Olympic infrastructure that cost billions for the 2004 summer games today lies in ruin along with the Greek economy. It took Montreal 30 years to pay off $1.5 billion in debt from the 1976 summer games, despite Mayor Jean Drapeau’s famous quip that their “Olympics can no more have a deficit than a man can have a baby.”

Olympics not only often lose money; many experts say they don’t produce much in the way of economic benefit. But mayors and premiers around the world want to achieve “World Class City” status and are enamored of the games’ less-quantifiable prestige and promotional value—a set of factors that incentivizes risk to be disregarded.

And while the games provide elites like Vladimir Putin with an international stage to preen on, their cities are often redeveloped at the expense of those with more humble means. Witness the mass displacement and harassment of the poor and inconvenient in Atlanta and Beijing. In Mexico City, soldiers massacred student protesters ahead of the 1968 Games. Human rights violations were rampant in Beijing and Sochi.

Barcelona’s 1992 summer games are often touted as a lonely counterexample: The city spent dearly, but used the Olympics as a platform to become an international tourist magnet. Still, whatever role the Olympics played in boosting that economy has proved a mixed blessing. Consider the hordes of drunken visitors rampaging down La Rambla, packing short-term rentals, annoying residents, and becoming a major political issue.

A lot of people, however, like the Olympics, and like them a lot. NBC reported that an average of 21.4 million tuned in to watch 2014 Sochi winter games each night during prime time. So unless one proposes abolishing the Olympics, they do have to be held somewhere. And L.A., given its preexisting infrastructure, is a better candidate than most.

“I think that the L.A. bid is a plausible one, and it’s much more plausible than the Boston one,” says Zimbalist.

L.A., he says, has three factors working in its favor: a lot of land, financial resources from local government, and most of the needed venues already in place. Yet those factors, and the city’s prudent vision for the games, are no excuse for signing on for cost overruns, according to the L.A. Times editorial board.

“In short, this is no time for blind boosterism,” the board wrote recently. “It’s a time for measured excitement, along with pointed questions and caution about the tradition of making the city the ultimate guarantor for any cost overruns. This is not an academic concern; in fact, every Olympic Games over the last 50 years has had cost overruns.”

In the late 1970s, fiscal conservatives on the city council successfully won a waiver for cost-overrun liability, according to the editorial, the first and last time the IOC agreed to such a deal.

Garcetti spokesperson Connie Llanos says that L.A. had fewer international competitors and more leverage in 1984, and that failing to agree to cover cost overruns today would imperil the bid.

In a statement, Garcetti wrote that he is “confident that, after careful vetting from the City Council and community members, everyone will agree that the potential for economic, civic, and cultural gain will far outweigh any risks of agreeing to a financial guarantee. There is only one way to guarantee no risk, and that’s denying our City the chance to be a host City.”

If L.A. is the best fit, it might even follow that it should host the Summer Olympics not only in 2024, but in perpetuity—or at least once every 24 years. Critics, citing political fallout and cost overruns, have long called for the Olympics to be held in one city each time or, alternatively, for one permanent site to be selected on each continent (or, at least the five most populous). The idea of a permanent home is an old one: Olympic basketball player and U.S. Senator Bill Bradley campaigned for Greece to be a permanent site amidst tit-for-tat U.S. and USSR-led boycotts of the 1980 Moscow and 1984 L.A. games, and following the 1972 Munich games killing of Israeli athletes.

However, this is unlikely to happen anytime soon, and of course presents its own problems: Does any city, after all, even want to host the games that often?

The IOC suggests that things will get better, and that it is taking cost and sustainability with a newfound seriousness. Last December, the body ratified “Olympic Agenda 2020,” which encourages bidders to propose “maximum use of existing facilities and use of temporary and demountable venues” and to ensure that their vision for the games “best matches their sports, economic, social, and environmental long-term planning needs.” The overall message: The IOC would now serve the host city, and not the other way around.

This is a reflection of the IOC’s growing awareness that out-of-control spending risks making the Olympics the exclusive province of freely spending autocratic states: Not-so-snowy Beijing ultimately beat out Almaty, Kazakhstan, for the 2022 winter games after multiple European cities dropped out.

It could be a big change. And it could also give cities like L.A. greater leverage in negotiations. Historically, the bidding process is seen as incentivizing competing cities to outdo one another in making extravagant promises to impress the IOC—which then results in costs spiraling out of control once the city has to put that plan into action. But its yet to be proven that IOC change goes beyond fresh marketing.

“Agenda 2020 contains some good ideas in theory, but it deserves our healthy skepticism, at least until we see IOC officials move beyond rhetoric and toward actual policies that help everyday people in the Olympic city (not just the local elite who perennially benefit from the Games),” says Jules Boykoff, a political scientist at Pacific University who has researched the games, in an email.

Zimbalist describes 2020 as likely, “more than anything else, an effort to improve the optics so cities bid again.”

And they have already started: Paris, Rome, Hamburg, and Budapest are all bidding to host in 2024. Zimbalist says that 2020 so far lacks proof of “substance … So far it’s been a PR campaign.”

As for the U.S. Olympic Committee?

“If they took 2020 seriously, they would have picked Los Angeles over Boston the first time around.”