Los Angeles, next up for Summer Olympics, hopes to turn a profit

Los Angeles: What Paris Olympics? Los Angeles is already looking ahead.

As the city prepares to host the 2028 Summer Games, construction crews have fanned out, racing to bolster the area’s infrastructure to accommodate hundreds of thousands of visitors.

Three main projects — expanding the rail system, revamping the airport and renovating the downtown convention center, which will be the competition venue for five sports — will have lasting effects on the region. The projects are funded through a mix of federal and city dollars as well as airport fees. And there will also be the tourist dollars spent while the Games take place.

The city sees the Olympics as a revenue producer, not an expense. Now it must disprove the skeptics who say it could be a boondoggle.

In 2019, two years after Los Angeles was awarded the Games, then-Mayor Eric Garcetti said he expected the city to turn a $1 billion profit.

For the current mayor, Karen Bass, hosting the Olympics is more than an opportunity to showcase familiar attractions such as Hollywood and Venice Beach. It’s also about connecting visitors with small businesses citywide.

“What determines success is for everybody to benefit,” Bass said in an interview. “They need to know about Little Bangladesh and Little Ethiopia and Little Armenia.”

Asked about potential downsides, Bass said she could think of only one, which she was determined to avoid. “We have to make sure that the Olympics is a positive economically and that the city of LA does not take an economic hit,” she said.

The 1984 Olympics in Los Angeles are widely considered to be one of the most financially successful modern Summer Games, because they largely used existing facilities for events. Repeating that success, however, will be a challenge.

The monetary benefits often promised by politicians eager to host the Olympics — infrastructure improvements, a swell of tourism and new jobs — are frequently exaggerated, said Jadrian Wooten, a professor at Virginia Tech, who researches the economics of sports and labor.

“While proponents usually just pitch the Olympics as an economic investment, it more closely resembles a really expensive party,” he said.

LA28, the private group organizing the Games, has an estimated budget of nearly $7 billion to cover costs associated with staging the events, including the opening and closing ceremonies.

As part of the city’s efforts to host the 2028 Games, Los Angeles officials and California lawmakers agreed to serve as a financial backstop, putting taxpayers on the hook for any expenses that run over budget. (The city has agreed to cover the first $270 million, and the state will cover the next $270 million. Los Angeles is then responsible for additional cost overages.)

Many Olympics have gone well over budget.

The pandemic-delayed Tokyo Games in 2021 totaled $14 billion, about 128% over budget, according to a University of Oxford study on Olympic costs. And the Rio de Janeiro Games in 2016 cost $24 billion, the most expensive Summer Olympics to date, which came in 352% over budget.

Los Angeles has the best shot of benefiting economically from the Games, Wooten said, if it follows its own lesson from the past: Emphasize sustainability, and avoid building facilities from scratch.

Despite the price tag, which LA28 has vowed to cover with sponsorships, ticket sales, global television rights and payments from the International Olympic Committee, the group has touted the Games as a windfall for the local economy.

“Almost all of LA28’s hiring and most of our direct spending will be local,” Casey Wasserman, chair of LA28, said in a statement. “Our suppliers, partners, broadcasters and Olympic stakeholders will also hire and spend in Southern California, and various LA28 contracts will require local sourcing.”

Separate from the cost of staging the Games — and perhaps of more strategic economic importance — is a larger, parallel investment in infrastructure, particularly transportation.

At a news conference last month outside the Los Angeles Memorial Coliseum, the focal point of the 1932 and 1984 Olympics, Bass announced that the city had secured nearly $80 million in federal funds to go toward zero-emission buses and electric charging infrastructure for them.

“We are hard at work preparing for all of the events,” Bass said alongside U.S. Transportation Secretary Pete Buttigieg, adding that the city was “preparing to host the world in a sustainable way that brings jobs to LA.”

The Los Angeles County Metropolitan Transportation Authority has spent $20 billion to expand bus and rail lines, including a train route from downtown to the westside, near the campus of the University of California, Los Angeles.

Los Angeles International Airport is getting a $14 billion face-lift that includes the addition of an automated people-mover linking the central terminal area to rail transit and a new rental car facility.

In March, the region received $900 million in federal funds for infrastructure and transportation improvements before the Games. And last month, the Los Angeles City Council approved $54 million for predesign work to expand the convention center.

The 1984 Games — which held most events at existing facilities such as the Coliseum, Rose Bowl Stadium and Pauley Pavilion, which is UCLA’s basketball arena — turned a reported $223 million profit ($670 million in today’s dollars), according to officials.

The 2028 Games will use the Coliseum for track-and-field events and the Rose Bowl, which is expected to host soccer. Events will also be held at SoFi Stadium, where the NFL’s Rams and Chargers play, and at the Intuit Dome, the home of the NBA’s Clippers.

Because officials say there aren’t adequate existing facilities to hold the softball and canoe competitions locally, those events will take place 1,300 miles east in Oklahoma City in order to keep costs down. And instead of building a multibillion-dollar Olympic Village, as most host cities do, athletes will stay in dormitories at UCLA.

Local politicians say they expect the Games to turn a profit, helping pad the city’s coffers for years after the athletes leave town.

Paul Krekorian, president of the Los Angeles City Council and a native Angeleno, points to the LA84 Foundation, which has funneled millions of dollars in profits from the 1984 Olympics toward efforts to promote youth development through sports.

“I believe the 2028 Games will similarly benefit Los Angeles for generations to come,” Krekorian said.

But the region’s efforts have already hit hiccups.

The plan for shuttling thousands of spectators around Southern California without creating freeway gridlock focuses on deploying more than 2,700 additional buses. Some local officials are worried about the cost of the additional bus service, which the Los Angeles County Metropolitan Transportation Authority estimates at $1 billion to $2 billion.

The cons of hosting far outweigh the pros, said Eric Sheehan, a member of a local group called NOlympics LA, which contends that the Games will speed up gentrification and worsen the region’s long-standing homelessness problem.

“We don’t believe that any increased economic output justifies putting anyone at risk of displacement, exploitation or criminalization,” Sheehan said. “Angelenos and Californians are on the hook for all overages.”

Given the ballooning budgets and last-minute logistical scrambles that lead up to many Games, some experts believe that the Olympics should select two cities as permanent hosts — one for the summer and another for the winter.

Doing so would create more economic and environmental sustainability, said Andrew Zimbalist, a professor at Smith College who has published books about the economics of the Olympics. And given its infrastructure and existing facilities, “Los Angeles would be an obvious choice for the Summer Games,” he said.