● From our sister site, TheSportsExaminer.com ●
“Relative to inflation, we have accounted for that. Today, we have about 64 or 65% of all revenues have been contracted. We have only spent 4%, and actually obligated 8% of the overall budget. And that actually allows us to be able to react to any inflationary pressures, and so we’re very confident that the budget continues to remain as it has, unchanged at $6.9 billion.”
That’s LA28 chief executive Kathy Carter, during a Tuesday appearance in front of the Los Angeles City Council’s Ad Hoc Committee on the 2028 Olympics and Paralympic Games, chaired by District 5 Council Member Katy Yaroslavsky.
Carter and others from the LA28 organizing committee were on hand to answer questions about their annual report filed with the City and which was reviewed by the Ad Hoc Committee.
The City Council’s budget hawk, District 2 member Paul Krekorian, asked about how the current financial situation compares with the organizing committee’s financial plan. Carter was quite positive:
“We are right where we need to be, and in fact, we are, again, at 64-65% of contracted revenues. We’re well ahead of where any other organizing committee would have been at this point, so we feel cautiously optimistic with all of the revenue targets. And because of how far we are on the revenues, it allows us to have great fidelity, if you will, on how and what we’re spending the dollars on, because as we all know, the immovable object for LA28 is a balanced budget, and I would stress as well, we have – and continue to have – a $615 million contingency that’s built into the expense budget.”
The financial statements in the report, for the calendar year 2021, showed a $74.4 million loss, but with $212.9 million in deferred revenue that is not yet recognized and $82.2 million in cash-on-hand. Carter explained:
“The cash that is actually in the door, typically it’s coming from a variety of areas. No. 1, it’s the broadcast distributions that are given to us by the [International Olympic Committee], who is responsible for selling all of our media rights, and so that’s a contracted income and that’s something that they’ve already started to pay.
“Second is obviously what we call intellectual property rights, so that’s for the sponsorship and consumer products rights, but because, obviously, we won’t be hosting the Games until 2028, we’re not actually ‘realizing’ those revenues, even though we have the cash in the door.”
She also added that the spending so far is fully shown on the financial statements:
“When I say we have spent 4% of the overall budget, and when we say we have contracted or essentially have earmarked 8%, that is for things like the Youth Sports Program, where we have a contractually-obligated responsibility, so we are actually, right now, it’s where and how much we’ve actually spent.”
Concerning the Youth Sports Program, which will receive $160 million in direct donations from LA28 through the middle of 2028, Carter said the program reach was stalled during the Covid pandemic, but is now expanding:
“I think the key thing for us … is expanding to all available City parks where the economic requirement is there. We have already impacted almost 100,000 kids in their ability to [get] either free or low-cost access to the program, and so we are process of both catching up to the years that we weren’t able to fund the program via Covid, and we feel that we’re on pace to make sure that every kid that wants to play, can be a part of this program, [which] will be available.”
Carter also told District 7 Council member Monica Rodriguez that LA28 has “about 14,000 hotel room nights” currently under contract and will be adding to that total, but that the organizing committee’s requirements still leave room for fans to book rooms during the Games period.
Those hotels which LA28 has contracted have “benchmark rate” clauses to ensure against gouging, but this would not apply to properties which the organizing committee is not involved with.
Observed: This was a generally upbeat report, especially in view of Carter’s comment that about two-thirds of LA28’s projected $6.884 billion revenues have been committed. There’s no secret about where this roughly $4.6 billion is coming from:
● The IOC, in the host city contract, pledged $1.535 billion in direct support, from broadcast rights and TOP sponsorships, about 22.3% of the LA28 budget total.
● LA28 has negotiated multiple domestic sponsorship agreements which are paying some money now, but much more later.
● Although tickets are not on sale yet, LA28 was involved in negotiations with the IOC for the appointment of On Location as the exclusive purveyor of hospitality and travel packages for the 2028 Games. A large guarantee was undoubtedly part of their agreement.
● LA28 has a merchandise agreement with Fanatics, which is also paying very significant sums for the right to sell licensed items of the 2028 Olympic and Paralympic Games.
The Youth Sports Program funding of about $18 million a year is being paid from the $180 million in broadcast rights fees advanced by the IOC from 2018-22, and which has now been received by LA28.
~ Rich Perelman
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