LA taxpayers will pay for cost overruns from the 2028 Olympics. That wasn't the case last time

Los Angeles is on the hook if there are cost overruns for the 2028 Olympics, but that was not the case the last time the city hosted the Games.

In 1984, city officials pressured the International Olympic Committee into making an exception to its rule requiring that host cities foot the bill if the Games were unsuccessful. That fierce public battle guaranteed L.A. wouldn't pay to bring the Olympics to town.

The IOC faced a crisis in the run-up to 1984. Los Angeles was the only bidder to host the Games. The cost of the 1976 Olympics in Montreal exploded from an initial estimate of $120 million to $1.6 billion, leaving the city with debt that took 30 years to pay off. Montreal's mayor had promised his constituents that running a deficit was impossible.

"This essentially scared everybody away except for Los Angeles," said Rich Perelman, who led press operations for the 1984 Olympic Games. "Because of that deficit nobody wanted to bid."

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Tehran had considered entering the fray to host the Olympics, but it pulled out due to political turmoil that would soon spark the 1979 Iranian Revolution. That left L.A. as the sole option for 1984.

A "tax revolt" in California

Then-mayor Tom Bradley and other L.A. officials wanted the Games to come to Los Angeles, but they couldn't afford to put city money on the line.

As L.A. was vying to host the Olympics, Californians were in a tax revolt that led voters to pass Prop 13, limiting property taxes. The public made it clear that it also didn't want tax dollars paying for the Olympic Games.

A 1977 survey of 1,200 Angelenos found that 70% supported bringing the Games to L.A. in 1984, according to an official report from the 1984 Olympic organizers. Only 35% remained supportive if the bid required city or county money.

"There has been so much bombastic rhetoric, all negative, about the Games, all predicting huge deficits, all voicing pessimism and gloom," Bradley says in a Sports Illustrated article in 1978, blaming Prop 13 and the media. "The atmosphere has been poisoned."

Making a deal

Public sentiment meant that L.A. officials had no choice but to broker a deal that did not include public monies backing the Games.

This presented a challenge to the IOC, because past Olympic Games had relied on government funds and a public backstop in the case of financial losses. It was the city of Montreal, not the International Olympic Committee, that took the fall when the cost of the 1976 Games ballooned.

The 1976 Games in Montreal left the city $1 billion in debt – a price tag that took 30 years to pay off.

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The IOC intended to require this of Los Angeles as well, but L.A. had more leverage than past host cities.

"The IOC has usually dictated its will to the host city, and its will has been followed," a New York Times article reported at the time. "But Los Angeles is attempting to use the advantage that goes with being the only runner in a race."

Tensions between the two sides continued to rise. One city councilmember was quoted in the press saying that the IOC could host the Olympics in Timbuktu if it didn't want to agree to the city's terms. Mayor Bradley threatened to pull out of the Games entirely.

Eventually, the IOC gave in. It pretty much had no other option.

In the fall of 1978, the two sides inked a contract that put a local private organizing committee, not the city of Los Angeles, in charge of the Games. The local committee and the U.S. Olympic Committee became the financial guarantors instead of L.A.

"The mayor, whose political fortunes have become closely identified with the OIympics, flashed a big smile, clapped his hands over his head and, in a high-pitched voice, said 'Yeah-hhh!," L.A. Times reporter Kenneth Reich wrote in October of 1978.

One month later, Angelenos overwhelmingly approved a ballot measure blocking public funds from being used on the Olympics unless they were reimbursed.

This sealed the fate of the 1984 Games. Los Angeles would have its cake and eat it too.

Los Angeles Mayor Tom Bradley holds the official Olympic Antwerp flag during the closing ceremony for the XXIII Olympic Summer Games at the Los Angeles Memorial Coliseum.

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A privately organized – and financed – Olympics

The deal between the IOC and the city of Los Angeles meant that for the first time, a private entity was responsible for staging the Olympic Games. That effort was led by businessman Peter Ueberroth, who took the helm in 1979 and needed a lot of money, fast.

The local Olympic committee controlled the lucrative television rights for the Games, and Ueberroth had broadcasters put down a refundable deposit to be considered. Five companies wrote checks for $750,000 each, according to Ueberroth's memoir. The organizers promptly put all that cash in a bank account earning interest, and used that interest to run day-to-day operations.

ABC eventually scored the T.V. deal and paid $225 million for it. Some of that had to be paid to the IOC eventually, but most of it went to the organizing committee. The local organizers used the interest from those funds to keep doing business. After 1984, the I.O.C. learned its lesson – now the international committee is the one that controls television rights.

Ueberroth and his team also changed the way Olympics sponsorships were brokered. In years past, hundreds of sponsors had kicked in small amounts to play a part in the Olympic Games. He shifted the strategy, instead having corporations bid against each other to be the sole sponsor of different parts of the Games.

Here's one example: When Kodak failed to offer at least $4 million to be the official film for the Olympics, Ueberroth gave Fuji Film 72 hours to sign on instead. Fuji locked in its place with an offer of $7 million.

"These checks started rolling in from sponsors," said librarian Michael Salmon, who works in the 1984 Olympic archive. "Bills were being paid and salaries were being paid."

In the end, the organizing committee made a killing – more than $230 million in profit. It also created a new model for financing the Olympics through huge corporate partnerships that continues today.

Renata Simril, the president of LA84 Foundation, the legacy organization founded with some of those profits, told LAist that that corporate legacy proved a new model for the Olympics could be successful.

"But I do think in some ways it has commercialized the Olympic Games to a degree that hurts my heart," she said. "We have to work harder to see the underlying value of the Olympic Games."

2028 v. 1984

International Olympic Committee President Thomas Bach (center) poses for pictures with Paris Mayor Anne Hidalgo (left) and Los Angeles Mayor Eric Garcetti during the 131st IOC session in Lima in 2017.

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Los Angeles faced different circumstances when it bid to host the Olympics this time around. There was competition.

Budapest, Hamburg, Los Angeles, Paris, and Rome all wanted to stage the 2024 Olympics. Then-Mayor Eric Garcetti said a bid would be “dead on arrival” without a guarantee that the city would financially back the Games.

In 2017, the IOC gave the 2024 Olympics to Paris and 2028 to Los Angeles. To secure its third time hosting the Games, L.A. agreed to what it vehemently opposed in 1984. It became the financial guarantor for the Olympic Games.