Op-Ed: How to guard L.A. from an Olympics disaster
We are often counseled not to repeat past mistakes. In the case of Los Angeles’ bid for the 2024 Olympic Games, we can actually learn from past success. The principle that underpinned L.A.'s bid for the 1984 Olympics — insulating the city treasury from financial liability for the Games — is as applicable today as it was then.
This week, the City Council will review a contract between the city and the U.S. Olympic Committee that would commit the city to unprecedented and irreversible financial obligations should it win the right to host the Games. Before approving it, the City Council should carefully consider this contract and take steps to protect taxpayers.
There are four principal problems with the agreement.
First, the Joinder Agreement, as the contract is called, joins the city to another contract, the Bid City Agreement, between LA 2024 (the private bid committee) and the USOC. The city was not a party to the negotiation of that agreement, and its text was only released to the City Council and the public on Tuesday.
Second, if L.A. is awarded the Games, the agreement requires the city to “execute and deliver a host city contract … upon presentation by the IOC in accordance with the IOC’s requirements.” This is a take-it-or-leave-it proposition from the International Olympic Committee. The host city contract traditionally includes the city’s guarantee of financial support for the Games along with a plethora of related items, like security, stadiums and the Olympic Village. To date, this agreement has not been drafted, yet the city is being asked to blindly commit to it.
Third, it cuts the city out of any further negotiations over its financial responsibility for the Olympics. In 1984, the city was held harmless from any Olympics-related financial liability thanks to a voter-approved ballot measure, Charter Amendment N. Staging and operation were turned over to a private committee led by Peter Ueberroth, and any cost overruns or budget shortfalls were deemed not the responsibility of the city. Today’s proposed agreement puts the city in the vulnerable position of assuming financial responsibility for expenditures by the host committee over which it has no control. In the months ahead, LA 2024, the USOC and the IOC will make key decisions that could affect the city’s finances. However, the city will have no seat at the table, and any City Council role going forward would be strictly a formality.
Fourth, it is not clear if the 2024 Joinder Agreement precludes a fiscally savvy citizen initiative. It legally binds the city to its terms except in the event of bankruptcy, insolvency or other similar occurrences; the list of exceptions does not include passage of a ballot measure similar to Charter Amendment N.
City Hall rushed this contract to the City Council, in part because of the IOC’s Sept. 15 deadline for the submission of candidate cities. No committee hearings have been held, and some of the legally binding documents were only shared with the City Council and the public within the last 24 hours.
It would be irresponsible for the City Council to rubber-stamp the agreement as delivered. Instead, it should modify the agreement to reserve meaningful, not ministerial, oversight of the Olympics contract negotiations as they affect the city treasury — at least until it (and the public) has had a chance to vet and approve all the relevant documents.
The City Council should also safeguard taxpayers by specifying that its approval does not constitute the city’s acceptance of sole financial responsibility for the Games. That can and should be subject to further negotiation with the IOC.
Finally, the City Council should insert a provision specifying that the agreement does not preclude a ballot measure that would limit the expenditure of city funds on the 2024 Games.
Proponents of the Los Angeles bid for the 2024 Olympics argue that these Games will make a profit. That may be true. Los Angeles is better positioned to realize a profit than any other city in the world because of the athletic infrastructure already in place.
There are, however, always risks with these undertakings. Circumstances and assumptions can unexpectedly change, transforming a projected profit into a sure deficit. The city’s leaders — the mayor, the City Council — have a fiduciary responsibility to protect the treasury and the taxpayers. Will they do their duty this week?
Zev Yaroslavsky is affiliated with the UCLA history department and the Luskin School of Public Affairs. He was a member of the L.A. City Council during the negotiations over the 1984 Olympics.
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