Concerned with cost overruns, Los Angeles City Controller Kenneth Mejia has requested financial documents from the Los Angeles Organizing Committee for the 2028 Olympic and Paralympic Games, saying LA28’s overspending may leave city taxpayers on the hook for millions of dollars.
Mejia asked for LA28 to provide his office with financial records and statements, alleging that the entity has failed to comply with requirements from a 2021 agreement between the committee and the City of Los Angeles, which is hosting the Olympic and Paralympic summer games in two years.
In a statement and in a post on X, Mejia indicated he made the request on Aug. 26 and continued to call for the records on Aug. 27.
“LA28 has been submitting insufficient financial documents. That’s why today (Aug. 26) the Controller’s Office has requested these documents because you all deserve to know what they’re spending their money on, especially since you all will be financially liable if the Olympics goes over budget,” he said on the social media platform.
“LA28, open up the books!” he exclaimed, making the statements while tossing around a ball, sometimes while standing in front of an Olympic flag hanging on the wall.
In the 2017 Host City Contract, the City of L.A. is on the hook as a “financial backstop” if the LA28 Games result in a financial deficit, Mejia said. This means L.A. taxpayers are exposed to financial obligations should the Olympics cost run over.
He is concerned that costs have been rising since 2021, and may cost the city more money should overruns continue.
When the City agreed to be the financial backstop for the Olympics in 2017, the budget was set at $5.306 billion. Since then, it has grown to $7.263 billion. Each time that expenses have increased, LA28’s projected revenues have similarly increased by the exact same amount, Mejia reported.
Representatives for LA28 did not respond to a request for comment.
“We all want a successful 2028 Olympic Games, but its success cannot be at the cost of transparency and accountability to LA taxpayers,” Mejia said in a statement.
A subsequent agreement between LA28 and the city, known as the 2021 Games Agreement, further established nine subsections that detail information LA28 must disclose annually. The Controller’s Office said that LA28 is only in compliance with two of those subsections, while six are incomplete and one is unknown.
The missing information includes comparisons of financial forecasts vs. actuals, bank statements, schedules and budgets for venues, the identity of contractors and the values and purpose of contracts.
Mejia noted that each time LA28’s expenses have increased, the organization’s projected revenues have similarly increased by the exact same amount. He argues that it is essential for LA28 to disclose all contractually required information so that L.A. taxpayers understand the scope of the financial risk they are taking.
Earlier this month, the Los Angeles City Council approved the so-called Enhanced City Resources Master Agreement with LA28. The agreement outlines how the city would be reimbursed for specific services — that exceed a normal day — provided within the city limits for the 2028 Games, such as sanitation, security and other things.
Under the agreement, if the 2028 Games is financially unsuccessful beyond a $600 million deficit, the city is guaranteed to cover $270 million. Following that, the state is obligated to cover the next $270 million in deficit. However, beyond that, the city has unlimited liability.
LA28 has a two-part contingency fund of about $600 million, of which $330 million is reserved to meet any internal financial shortfall in its operations and the remaining $220 million are available in cash to cover an organizing committee deficit.
City Administrative Officer Matt Szabo previously said that recent reports from LA28 indicated they are meeting target sponsorship and other revenues goals.
“This is a multifaceted, complicated agreement that is dependent upon other agreements that have been made,” Szabo, the lead negotiator for the city, previously said. “It is necessary that we keep in mind that we are in some way confined to prior agreements that were made as a condition of agreeing to host the games that include inherent risk.
“This is not an agreement that is intended, or even has the capability of eliminating risk that the city has agreed to take on,” Szabo added.
City News Services contributed to this article.