Los Angeles Faces $1 Billion Deficit Ahead of 2028 Olympics

Los Angeles achieved a notable financial success during the 1984 Summer Olympics, turning a profit, a rare accomplishment in the history of the Games. However, the city faces significant challenges in replicating this feat for the 2028 Olympics, given its current financial difficulties. The city is currently in a severe fiscal crisis, compounded by recent wildfires that have further strained its resources.

Kenneth Meija, the city's auditor, recently underscored the gravity of the situation in a letter to Mayor Karen Bass and the city council. The letter revealed a projected budget shortfall of $140 million for the current fiscal year, with an additional $73 million expected to be cut next year. Meija pointed out that the city's expenditures have exceeded its budget by $300 million, and a senior budget official estimated that the deficit could reach $1 billion in the next fiscal year. The state legislature has already allocated $25 billion in funds and is seeking an additional $19 billion to aid the city's recovery from the January wildfires.

The Los Angeles 2028 Olympic Organizing Committee (LA28) is a private, non-profit organization responsible for organizing the 2028 Olympics. Its budget stands at $6.9 billion, funded through corporate sponsorships, licensing agreements, and a substantial donation from the International Olympic Committee. This budget covers the costs of renting sports venues, personnel expenses, and athlete accommodations.

However, if the actual costs of the Olympics deviate from the planned budget, taxpayers may be on the hook for part of the shortfall. Both the city of Los Angeles and the organizing committee are aware of the risk of cost overruns. In 2019, the budget for the 2028 Olympics was increased by $1.36 billion. If the budget for the 2028 Olympics is found to be insufficient, the city will be responsible for providing an additional $270 million. After that, the state government will cover the next $270 million, with the city again bearing the financial burden for the subsequent $270 million.

This financial strain comes at a critical time for Los Angeles, as the city prepares to host one of the world's largest sporting events. The 1984 Olympics were a financial success due to a combination of factors, including cost-cutting measures and a focus on private sponsorships. However, the current economic climate and the increased costs associated with hosting the Olympics present significant challenges for the city.

The potential for cost overruns and the need for additional funding highlight the importance of careful financial planning and management. The city and the organizing committee must work together to ensure that the 2028 Olympics are a financial success, while also addressing the immediate fiscal challenges facing Los Angeles. The success of the 2028 Olympics will depend on the ability of the city and the organizing committee to navigate these challenges and deliver a successful event within the allocated budget.