- LA’s wildfires put added pressure on the city’s 2028 Olympic hosting gig.
- Historically, most host cities have faced costly overruns.
- LA could be in a stronger position than other cities because of its existing sports venues.
Los Angeles’ wildfire rebuilding efforts could be at odds with another multibillion-dollar expense: hosting the Olympics.
The city’s recovery efforts face a hard deadline ahead of the 2028 Summer Olympics. Historically, most host cities have faced costly overruns, and LA is already likely to face serious economic challenges in the wake of the fires.
However, Andrew Zimbalist, a sports economist at Smith College, told Business Insider that LA could be in a stronger position than other cities to handle Olympic costs because of the city’s existing sports venues.
“I think the 2028 games will provide an opportunity for Los Angeles to show how it’s rebuilt itself,” Zimbalist said.
While many sports facilities were sparred from the fires, the city’s economic losses could reach $275 billion, per the data platform AccuWeather. The estimate accounts for direct costs like emergency response and construction, along with indirect costs like lost employee wages, housing displacement, and hits to the local business scene and job market. Additionally, some experts estimate it could take the city years, or up to a decade, to rebuild.
Zimbalist said he thinks LA is in a good position to “break-even” economically as the Olympics host, in large part because it doesn’t have to build any new sporting venues. This will significantly reduce the construction and infrastructure costs that often balloon host cities’ spending.
The LA Olympics Games have an operating budget of $6.9 billion, according to the latest estimate provided by LA2028, the private committee responsible for putting on the Olympics and raising funding for the games.
The money is expected to come from International Olympic Committee funding and revenue generated from the Games — which are tied to things like international sponsorship income, ticket sales, and licensing merchandise. These funds will go toward hosting the sporting events and the opening and closing ceremonies, including investments in the city’s airport and a downtown convention center.
LA2028 did not respond to BI’s request for comment.
LA may be in a strong position to host 2028
If the costs of hosting the Olympics exceed the generated funds, LA has pledged to contribute $270 million to close the gap. If this isn’t sufficient, the state of California has committed an additional $270 million, and if that doesn’t cover it, LA would be on the hook for the rest. As of July, LA2028 was $1 billion short of its sponsorship goal.
Zimbalist said this insurance policy to cover some of its exposure in the case of a budget overrun is standard for every host city. As things stand, he doesn’t expect the Games to go over budget, though he said it’s “far from a sure thing.”
“I don’t see there being a public deficit here overall because there’s so little building to be done,” Zimbalist said.
While LA might be able to avoid drawing upon public funds, the Olympics are likely to cost US taxpayers. Zimbalist said LA is counting on the federal government to help provide as much as $5 billion in funds for transportation and security costs ahead of the Games. In comparison, the federal government’s contribution to the 2002 Salt Lake City Winter Olympics was about $2 billion when adjusted for inflation.
In 1984, the last time LA hosted the Olympics, Zimbalist said LA generally avoided negative economic impacts, which he said was driven by the availability of existing venues, significant IOC funding, and solid financial management from the city’s Olympic committee. He said that LA could benefit from the same factors this time.
Host cities often lose money on the Olympics
Many Olympic host cities spend beyond their budget due to unforeseen expenses, construction costs, or an inability to produce enough tourism revenue, per the 2024 Oxford Olympics Study. And, with a higher number of events and athletes, the study reported that the Summer Games are especially expensive.
The Oxford Olympics Study — which analyzed the cost of past Olympics in 2022 US dollars — found that the Summer Games held between 1960 and 2024 went over budget by an average of 195%. In the past two decades, the most expensive Games was Rio 2016, costing $23.6 billion with a cost overrun of 352%, some of which was shouldered by taxpayers.
“When you add it all up, most cities end up with a deficit that could be on the order of $10 or $20 billion, sometimes more than that,” Zimbalist said.
In December, Paris announced that it closed the 2024 events under budget, but this only included the operating costs of the Olympics during the 17 days they were held. When operating costs, capital costs related to the Games (like building sporting venues), and indirect capital costs (like investments in Paris’s rail system) are all accounted for, Zimbalist estimated that the total spending approached $20 billion.
To be sure, Zimbalist said there are benefits to hosting the Olympics that economic indicators can’t measure. While LA will likely still be recovering from the wildfires, he said the Olympics could provide the city with the opportunity to show its progress.
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