LA WATCHDOG--Los Angeles has submitted its bid to the International Olympic Committee (“IOC”) to be the Host City for the 2024 Summer Olympics. However, one very important caveat was inserted by the City Council which requires it to approve any future contracts with the IOC. This is designed to protect our cash strapped City from having to indemnify the IOC and the United States Olympic Committee (“USOC”) against any losses if LA is selected as the Host City.
In the words of City Council President Herb Wesson: “In essence, we have bought the City time to properly negotiate. This is the engagement. It’s not the wedding. And now it’s time to work on the pre-nup.”
But this does not mean we live happily ever after. Our City is not off the financial hook because a lot of spaghetti and meatballs can hit the fan between now and September of 2017 when the IOC selects the Host City and 2024 if LA is home to the Summer Olympics.
According to the Los Angeles 2024 Bid Committee (“LA24”), these Olympics will generate revenues of $4.8 billion and a profit of $161 million. This is after taking into account a $400 million contingency fund, an insurance premium of $150 million designed to protect the City against any unforeseen events and losses, and $200 million to reimburse the City for its services.
However, it does not take into account $1.7 billion that will be provided by the private sector. This includes $500 million to renovate the Memorial Coliseum (this is in addition to the $300 million provided by LA24), $925 million for the Olympic Village, and $275 million for other competitive venues. It also does not include funds for the broadcast center at NBC/Universal or the cost of security.
While the City Council has the right to approve any contracts with the USOC and the IOC, that may be increasingly difficult as the selection date approaches and the IOC starts playing LA off against Paris, Rome, Hamburg, and Budapest.
To protect our City and its taxpayers from a multiyear financial hangover, the City needs to ensure that the projections do not overstate the revenues and benefits and understate the costs.
To proceed, the City and LA24 must meet the following ten requirements prior to the submission of its final offer to host the 2024 Summer Olympics.
One: The County and the State, along with the City, agree to backstop any losses incurred by the IOC. This will spread the risk to match the tax benefits and provide further insight into LA24’s revenue and cost projections.
Two: The City and LA24 agree to hire an experienced and well-heeled operator to manage the Olympics. This operator would absorb a major portion of the risk in return for a piece of the action and a hefty insurance premium. One alternative is AEG, the owner of Staples and Stub Hub and the manager of numerous venues around the world. This will also result in additional review and analysis of LA24’s revenue and cost projections.
Three: The City and LA24 enter into an agreement with the private and public sector unions not to strike any Olympic venue before or during the Olympics.
Four: The City and LA24 arrange for tight security for the Games. This will require the cooperation of Washington as well as federal dollars.
Five: The City and LA24 confirm the funding of the $500 million renovation of the Memorial Coliseum as USC will not raid its endowment.
Six: The City and LA24 arrange for the financing of the Olympic Village as well as its location. Union Pacific’s Piggyback Yard, located on the LA River north of DTLA, may not be a suitable site because of its closure may have an adverse impact on the Port and the Alameda Corridor.
Seven: Who will pay for the broadcast center at NBC Universal?
Eight: The City and LA24 operate in an open and transparent manner; will disclose the economics of the IOC, the USOC, and all participating countries; and agree not to violate the Foreign Corrupt Practices Act.
Nine: City Hall agrees not to meddle in the operations and decision making process. According to Mayor Tom Bradley, this was the key to the success of the 1984 Olympics.
Ten: No free tickets or special privileges for our Elected Elite.
We all want a happy marriage between LA and the Olympics. We want to enjoy the Games and the benefits it will provide to our City and its economy. But this union must be done in a prudent manner as our City cannot afford to backstop any losses because it does not have the resources to even fill its potholes or fix its broken sidewalks.
The alternative will be very messy as Angelenos will march to the ballot box to approve a measure will prohibit the use of public funds to support the Olympics.
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Petition – Free Our Los Angeles Times
The City and County of Los Angeles deserve a newspaper of record that, in the words of Austin Beutner, is its “civic conscience which holds accountable those with power, helps celebrate what is good in our community, and provides news and information to help us better understand and engage with the world around us.”
Our Los Angeles Times must continue to reengage the Southern California community by investing in high quality content, award winning journalism, and new technologies. It can no longer live with the “cost cutting to prosperity” strategy of its owner, the highly leveraged Chicago based Tribune Publishing Company.
To achieve the goal of a vibrant, engaged, and civic oriented LA Times, we call on Tribune Publishing Company and its major shareholders to spinoff our Los Angeles Times into a separate, locally controlled company and to reinstate Austin Beutner as Publisher.
HELP FREE OUR LOS ANGELES TIMES—SIGN THE PETITION NOW!●●●
The Tribune Publishing is a newspaper publishing company. In addition to the Los Angeles Times and the San Diego Union-Tribune, it owns seven other daily newspapers around the country: the Chicago Tribune, Baltimore Sun, Hartford Courant, Orlando Sentinel, Sun Sentinel (South Florida), Daily Press (Newport News, VA), and The Morning Call (Allentown, PA). Revenues are approximately $1.7 billion while operating profits have declined by over 40% to around $150 million, or about 9% of revenues. The market value of the company is around $275 million, down over 50% in the last year, while its debt and unfunded pension liabilities exceed $500 million.
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(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected])
-cw
CityWatch
Vol 13 Issue 77
Pub: Sep 22, 2015
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