Los Angeles, Next Up for Summer Olympics, Hopes to Turn a Profit

As the paris Olympics are now history, Los Angeles is already looking ahead. As the city prepares to host the 2028 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, Eric Garcetti, then the mayor, 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 like Hollywood or Venice Beach. It’s also about connecting visitors with small businesses citywide.

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

Asked about potential downsides, Ms. 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 L.A. 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.

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 percent 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 percent over budget.

Los Angeles has the best shot of benefiting economically from the Games, Mr. 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, chairman 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, Ms. 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,” Ms. Bass said alongside Transportation Secretary Pete Buttigieg, adding that the city was “preparing to host the world in a sustainable way that brings jobs to L.A.”

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.

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

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.

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