Los Angeles first hosted the Olympics in 1932 – the still-standing Los Angeles Coliseum was built for those Games. The 1932 Olympics were followed by the 1936 Games in Berlin, which were scarred by the dark shadow of Hitler and the Nazi horrors to come. The 1940 and 1944 Games were, of course, cancelled due to World War II. Thus, through no fault of the local sponsors, the 1932 Los Angeles Games marked the beginning of the decline of the globe into catastrophe.

LA’s 1984 Games, by contrast, are often said to have saved the Olympic movement. The International Olympic Committee’s post-war difficulties had started with the 1968 Games in Mexico City, the first Olympics to be held in a developing country. Just days before the opening ceremony the government sent in the army to quell a massive protest, resulting in the reported deaths of more than 200 university students. Air quality issues in Mexico City, along with racial politics dribbling over the border from the U.S., further besmirched the image of the Mexican Olympics.

But, of course, things were about to get worse. The 1972 Games in Munich were reduced to a shambles by an attack on the Israeli quarters in the Olympic Village, where the terrorists demanded the release of 234 Palestinians held in Israeli prisons. When the assault and negotiations ended, 11 Israelis lay dead, along with five terrorists and one German police officer.

Actually, Olympic optics took yet another hit shortly thereafter. In 1970, Denver had been selected to host the 1976 Winter Olympics. However, following a local grassroots campaign that focused on escalating costs and environmental degradation, 60 percent of Colorado voters refused to sanction a $5 billion bond to finance the Games. Denver withdrew. And the IOC turned to Innsbruck, Austria, which had hosted the 1964 Games, to be the venue for the 1976 Winter Olympics.

This list of miscues goes on. Montreal agreed to host the 1976 Summer Games. But plagued by poor management, labor disputes, and problematic stadium and airport design, construction fell considerably behind schedule. Ultimately, the provincial government of Quebec had to take over the Olympic works project. And notwithstanding Montreal mayor Jean Drapeau’s infamous boast that “the Olympics can no more have a deficit than a man can have a baby,” the final bill was over eight times (!) the initial bid, creating a debt that Montreal did not pay off for 30 years.

So, not surprisingly, when it came time for cities to bid for the 1984 Games, only one stepped up. As the sole bidder, Los Angeles had some leverage and refused to guarantee the Games’ finances with public funding. But with no deep-pockets alternative, the IOC had to accept LA’s terms.

Meanwhile, LA had learned from Montreal’s nosedive. Peter Ueberroth, the future Major League Baseball commissioner who headed the LA organizing committee, relied heavily on the city’s existing sports, transportation and hospitality infrastructure, and developed a highly successful private sponsorship model. LA actually wound up with a $225 million surplus from the Games, and the IOC’s 16-year PR slide was reversed. LA 1984 had revived the Olympic brand – and, many say, saved the Games.

The Olympic movement did flourish for the next two decades, though not without a few blemishes. But the bad news re-emerged with a vengeance beginning with Athens in 2004 and continued through Tokyo 2020 (held in 2021). Exploding expenditures, white elephant facilities and hosting bills regularly surpassing $20 billion (not to mention environmental and social disruptions) led to a paucity of bidders. Indeed, after Hamburg, Budapest, Boston and Rome all dropped out of the competition to host the 2024 Games, the final number of bidders was down to two: Paris and Los Angeles. 

Fearing that there might be no bidders to host the 2028 Games, the IOC took the unique step of awarding the 2024 and 2028 Olympics at the same time in 2017. Two years later the IOC, seeking a more reliable way to avoid the humiliation of no suitors, declared that the bidding process would henceforth take place behind closed doors. So a year ago, the big question was whether Paris would turn around the IOC’s branding misfortunes, or whether that task would fall once again to Los Angeles.

The 2024 Paris Olympics

The Paris Games got off to an inauspicious start with train-track sabotage across France just hours before the opening ceremony, followed by doubts about the adequacy of the Seine’s cleanup (where the swimming legs of the triathlons were held) and disruptive fan incidents at soccer matches. Nonetheless, Paris managed to brush aside the bad press and the 2024 Games emerged with a positive report card. However, the actual fiscal experience – the one that would have been reported by the auditors if the Olympics were, say, a publicly owned corporation – is another story.

A study by two business school professors at Oxford University estimated that Paris 2024 went 115 percent over budget – that is, spending a bit more than double the anticipated cost – even after controlling for inflation. (Not accounting for inflation, the overrun was 146 percent.) But we get ahead of ourselves. It is important to understand there are at least three Olympic budgets that are commonly conflated. 

First, there is the operating budget that is released by the organizing committee. This includes only expenses directly related to putting on the 17 days of the competition. It thus excludes construction of permanent venues and infrastructure, which usually far surpasses the operating costs in magnitude.

Second, there is the budget as reckoned by the Oxford study. This accounting includes spending on permanent sports and related Olympic facilities. It came to an estimated $8.8 billion, but the Oxford study cautions that this is likely to be adjusted upward. In addition to the operating costs, the figure includes $1.85 billion for the construction of the Olympic Village, as well as $200 million for the aquatic center and $150 million for the gymnasium.

Reuters crunched these same numbers, too, concluding that the operating costs came to approximately $4.9 billion, while the facility costs amounted to $5 billion. So the grand total was just shy of $10 billion, of which an estimated 30 percent was covered by public funds.

Third, there is the “all-inclusive” budget that also considers infrastructure expenditures related to the hosting enterprise. There are no comprehensive estimates here. But we do know that the extension of the Metro (sub - way) lines to St. Denis where the Olympic Village and Stadium were located cost an estimated $3.8 billion. Cleaning up the pollution in the Seine River for use by Olympic swimmers ran $1.65 billion and will require tens, if not hundreds, of millions of dollars annually to maintain. Other metro and transportation projects added billions more. Of course, some of these infrastructure improvements (but hardly all) were welcome additions to the Parisian ecosphere, and their cost should not be entirely allocated to the problematic finances of hosting the Games.

Note that all three Olympic budget calculations – even the all-inclusive budget – leave much unaccounted for. Consider, for instance, the reported cost of security, which was entered in the Paris 2024 official budget at around $350 million. This number must rely heavily on creative accounting since (a) previous Games have acknowledged security costs two to six times higher, and (b) reports for Paris indicate that there were 45,000 soldiers and police plus 50,000 private security agents on duty during the games, along with an imposing assemblage of equipment and military hardware. An analysis from S&P Global suggests the effort could have added over $3 billion to the final bill.

Need we go on? Well, yes. Common to virtually all recent Olympic Games, local governments make a point of tidying the streets by removing people who are homeless. The Associated Press estimated that nearly 20,000 homeless people were sent packing before the crowds arrived for the Paris Games. Still another hidden cost: the increased wages and bonuses that French unions were able to extract when they threatened to go on strike during the competition.

One interesting feature of the Paris Games is that the IOC contribution to its financing did decline for the first time this century. The IOC contribution has steadily risen from $965 million in Athens 2004 to $1.88 billion in Tokyo 2020. It then dropped to $1.2 billion in Paris (roughly one-fourth the $4.73 billion that the IOC earned from media rights and sponsorship sales from Paris 2024). This sum was supplemented in the Paris Games budget by ticket revenue of $1.4 billion and domestic sponsorship revenue of $1.2 billion.

France was able to control its total expenditures in part because it took a cue from the 1984 LA Games: 95 percent of the athletic venues already existed and only required minor refurbishing. Nonetheless, the French government did provide the IOC with a $3 billion-plus financing guarantee. In the end, French taxpayers shelled out an estimated $3.26 billion, though the head of France’s national auditor said the final taxpayer bill could exceed $5 billion.

The final initiative to make the cost of Paris 2024 more palatable was to contract for an economic impact study. As with previous games, this promotional study used faulty methodology and unrealistic assumptions in claiming to identify substantial income and employment growth for Paris.

The primary source of these purported gains was in the alleged growth in tourism. However, it is often the case that normal tourism is chased away by Olympic tourism, as travelers and businesses avoid the host city for concern over congestion, high prices and possible security incidents. And the evidence of the net impact on tourism last summer in Paris doesn’t support a rosy view.

The Washington Post wrote that “Air France-KLM reported a drop in traffic as travelers appeared to be avoiding both the Olympic crowds and premium [hospitality] pricing in Paris. Lower than expected occupancy has prompted some hotels to reduce last-minute rates. Meanwhile, shops and restaurants near Olympic venues with tight security have complained of a slump in business.

Euronews estimated that Air France-KLM lost €150-170 million in revenue. And preliminary figures from the French Statistical Agency indicate an average hotel occupancy rate in Paris of 70.7 percent during July and August 2024, down from 75.5 percent during July-August 2023. There was also anecdotal evidence that the hotel slump would have been even greater if empty rooms hadn’t been filled with imported security workers.

So, on balance, despite a hardworking and largely successful propaganda machine, an objective view suggests Paris 2024 generated mixed fiscal results at best. Yet while Paris 2024 cannot lay claim to turning around IOC fortunes, it may be credited at least with arresting their 21st-century slide. Any substantial reputational gains will await LA28.

Looking Forward to LA28

As noted above, one of the key reasons Los Angeles was able to eke out a surplus in 1984 was access to existing infrastructure that obviated the need for a building bonanza. And what was true in 1984, will be true in spades in 2028. Newly built venues in Los Angeles, Inglewood, Carson and elsewhere, a growing network of public transport, the Comcast communications facility, and modern dormitories on the UCLA and USC campuses will make significant construction unnecessary.

Another bonus will come from the U.S. government, which barring intervention by a White House devoid of goodwill for California, will declare the 2028 Games to be a special national security event and cover most of the security bill. Further federal aid will come in the form of support for bus transportation (discussed below) similar to the government funding granted to the Salt Lake City Winter Games in 2002. Thus, although the city and the state each committed a $270 million financial guarantee and the initial LA budget for the Games has risen from $5.3 billion to $6.9 billion (after adjustment for inflation), the odds appear favorable that LA28 will not end up in the red.

Offsetting the $6.9 billion Olympic operating budget (which includes a $615 million contingency fund cushion), LA anticipates $2.5 billion in domestic sponsorship revenue, nearly $2 billion in ticket sales, an IOC cash contribution of $1.35 billion (up slightly from Paris), consumer product licensing receipts, donations and private funding for venue overlays.

It’s not quite time to count chickens, though. Casey Wasserman, chair of LA28 and experienced sports executive, has likened the complexity of hosting the Olympics to hosting six Super Bowls a day for 17 consecutive days. And Wasserman’s metaphor reminds us that success will still require some luck.

Beyond hoping for good luck, there’s some heavy lifting to do. The organizers of LA28 have stated their intention to make the Games car-free. By this they do not mean, of course, that there will be no cars on the streets and freeways of Los Angeles. Rather, that all spectators along with the Olympic workforce will travel to competition venues by rail and bus.

The rail system is being expanded as part of a long-term plan, though elements of the plan are being accelerated. Buses will be bought and borrowed, with a total bill estimated in hundreds of millions. (Athletes, media personnel and executives will still be transported in private vehicles.)

Then there’s LA’s chronic issue of what to do with the city’s 75,000 unhoused. The good news is that since there will be little or no new construction, the Games will not require forced relocation to free up land. And if financial plans hold up, there will not be a drain on the city budget requiring a reduction in social services. The bad news is that solutions to homelessness are elusive for all sorts of reasons. However, LA Mayor Karen Bass has declared homelessness to be an “unprecedented emergency” and has begun to introduce new initiatives. The most recent being a doubling of the Measure H sales tax slated to raise $1.1 billion in support of housing initiatives. Time will tell.

Perhaps the wildest wild card here is the economic and geopolitical position of the United States in four years. The promised Trump economic policy, if followed through, is bound to engender serious disruptions. High tariffs would push up domestic prices, lead to some shortages and certainly result in retaliation from other countries – not to mention discourage Olympic attendance by foreigners.

Income tax cuts, combined with the need to spend tens of billions to implement the eviction of millions of immigrants would aggravate the federal budget deficit, pushing up interest rates. Meanwhile, the decimation of the undocumented immigrant labor force would reinforce inflationary pressures.

Note, too, that LA28’s financial success depends heavily on the sale of promotional rights to U.S. companies. And economic and political uncertainty will dampen enthusiasm for both domestic and international corporate sponsorships.

LA28 has taken the important step of buying insurance against force majeure events – wars, weather disasters, earthquakes – as well as a ticket sales slump. This reduces risk, but it doesn’t come close to eliminating it.

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For all the uncertainty, I am cautiously optimistic that the 2028 Games will once again show Los Angeles in its best light – and keep the Olympic movement on track in these perilous times. But for the moment, the emphasis should be on “caution” not “optimism.”