● From our sister site, TheSportsExaminer.com ●
The LA28 Olympic and Paralympic organizing committee has mostly adopted the rule of silence in its build-up to 2028, but is required by its agreement with the City of Los Angeles to provide an annual report, including financial statements.
The 2023 edition was made public on Wednesday, with data on 2021 and included both audited financials and its IRS Form 990 tax return. The formal presentation showed another big loss for the year, but the detail showed the first signs of financial support from the efforts of the U.S. Olympic & Paralympic Properties joint venture by LA28 and the U.S. Olympic & Paralympic Committee:
“At the end of the year, LA28 completed an integrated strategic plan and annual operating plan for 2023. The result of that plan did not have any material impact on the Games Budget. LA28 continues to manage inflationary pressures through a combination of initiatives focused on reducing the cost and complexity of the games and increasing monetization opportunities. …
“Revenue in 2021 is $22M offset by $93.2M expenses, which results in an annual deficit of $71.2M. The total cumulative deficit is $145.7M. In accordance with generally accepted accounting principles (GAAP), LA28 is required to defer the recognition of significant revenues received ($212.9M through 2021) until the contractual obligations can be performed (e.g. activation of sponsorship and licensing rights at a future date). As deferred revenue becomes recognized in future years, it will offset the current reported deficit. LA28’s financial health is more accurately reflected by the increase in cash during the year, totaling $23.2 million, and the ending cash balance of $82.2 million. . . .
“LA28 is finalizing its accounting for fiscal year 2022. The organizing committee’s primary source of cash in 2022 was the International Olympic Committee’s payments totaling $36 million and sponsorship and licensing payments totaling $75 million.”
The LA28 budget, forecast at $6.884 billion in 2019, was confirmed as still valid.
There was also a fascinating new report in the package, forecasting cash flow for the next few years and demonstrating the back-loaded spending plan always envisioned:
Revenue:
● 2017-21: $239.7 million (actual)
● 2022: $121.6 million (actual and forecast)
● 2023: $181.7 million (forecast)
● 2024-29: $6.341 billion (forecast)
Expenses:
● 2017-21: $158.6 million (actual)
● 2022: $137.6 million (forecast)
● 2023: $189.2 million (forecast)
● 2024-29: $5.793 billion (forecast)
The totals are $6.884 billion in revenue and $6.268 billion in expenses, with the difference of $616 million the contingency cushion.
The staff total at the end of 2021 was 102, with most in Los Angeles, but:
“The Organization expects to run efficient operations with a modestly lean team for the next 2 to 3 years; however, closer to the Games, the workforce will grow to thousands, including full-time employees, contractors, and volunteers.”
Significant funds from the USOPP joint venture is already going to the U.S. Olympic & Paralympic Committee under a 2020 agreement that will pay $430 million in all:
● 2022-23-24: $58 million per year
● 2025-26-27-28: $64 million per year
Payments began in 2021 and $46.1 million was charged against the combined LA28/USOPP entity, accounting for 65% of the 2021 deficit.
Observed: It’s not possible to judge the future health of the LA28 effort from the 2021 financial statements or even the current report to the City of Los Angeles. But the revenue turbine is starting to turn and in a program which projects $2.52 billion in domestic sponsorship revenue, that’s a good sign.
Also positive is the low staff numbers shown in the financials (102) and for LA28 alone on the Form 990 tax return (87). And there are people volunteering already: 47 are shown on the tax return!
~ Rich Perelman
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