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≡ ANALYSIS & OBSERVATIONS ≡
If you have a tall glass sitting on a table, about to get filled, are you worried about the glass currently being empty, or looking forward to when it is full?
That’s a question that could also be asked after reading the 157-page annual report from the Los Angeles 2028 Olympic and Paralympic organizing committee, submitted to the City of Los Angeles on 31 March and posted to the City’s Web site on 1 April.
The report begins with the assurance that “LA28 is on track to deliver an amazing Olympic and Paralympic Games in Los Angeles in 2028,” and goes on to explain the many changes which took place in 2024, including the hiring of former Lt. General Reynold Hoover as the new chief executive last June.
In terms of financial performance, the LA28 financial statements for 2023 were included, showing another annual loss, this time of $74.47 million for a cumulative loss of $307.53 million since inception.
LA28 showed $82.18 million in revenue, with $156.65 million in expenses, led by “costs of revenue” of $67.28 million (commissions and contracted early payments) and personnel costs of $40.04 million.
However, assets ballooned from $94.37 million at the end of 2022 to $224.31 million at the end of 2023. Cash and cash equivalents increased from $65.43 million to $102.23 million, even with the total deficit of $307.53 million.
How does all that work out? From the notes to the financial statements, here’s the key:
“Contract Liabilities include revenue received in advance of fulfilling the associated performance obligations, such as the delivery of sponsorship rights, which the Organization has deferred.”
So, on page 14 of the statements, there is a listing of licensing, sponsorship, hospitality and other contracted revenue which has been received (!) but against which no delivery of goods or services has been made, so they are a “liability” for now.
That total is $473.53 million through the end of 2023, with $106.35 million shown as “current” liabilities and the remaining $367.19 million as “non-current.” Those “liabilities” are much more than the $307.53 million cumulative loss shown as of the end of 2023, so – in fact – LA28 is beginning to accumulate some of the billions of dollars it will need on the road to the Games.
There was more good news in the LA28 commentary at the front of the report, listing revenues on a cash basis:
● $361.2 million from 2017-22
● $179.2 million in 2023
● $487.0 million in 2024
Yowsah! That 2024 figure is good news, with funding from sponsorships, hospitality guarantees, licensing and the IOC contribution. So, the money is starting to flow.
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At the same time, this annual report is significant in that a new, overall budget was shown, updated for the first time since 2019, and it shows an increase from $6.882 billion to $7.149 billion, or an increase of 3.9%. Comparing the 2024 budget to 2019:
Revenue: $7.149.4 billion
● $948.0 million from IOC TV sales (+$100.0 million vs. 2019)
● $437.0 million from IOC sponsorships (same; no new mobility sponsor)
● $2.5173 billion from domestic sponsorships (-$0.4 million)
● $2.4978 billion from tickets and hospitality (+$569.0 million)
● $344.0 million from licensing and merchandise (+$39.1 million)
● $405.3 million in other revenues (-$192.5 million)
Expense: $7.149.4 billion
● $1.4281 billion on venue infrastructure (-$356 million vs. 2019)
● $1.3290 billion on sports-Games operations (+100.3 million)
● $829.8 million on technology (+$203.3 million)
● $1.0207 million on human resources (+107.3 million)
● $252.1 million on ceremonies (+7.1 million)
● $355.5 million on communications/marketing/look (-$41.8 million)
● $564.7 million on corporate admin & legacy (-$22.4 million)
● $756.0 million on other expenses (-$50.7 million)
● $613.5 million for contingency (-$2.4 million)
For those asking about the impact of inflation from 2019 to 2024, the U.S. Consumer Price Index was at 255.657 as the averaged 2019 index figure and 313.689 for 2024 as a whole, an increase of 22.7%. So the 3.9% increase for LA28 hardly seems out of line.
LA28 Chair Casey Wasserman has said multiple times that the organizing committee has contracted revenues of $4.6 billion already in hand and expects – with sponsorship sales picking up – to be at $5.1 billion or more by the end of 2025, about 71.3% of the new budget target of $7.149 billion, with 2 1/2 years to go.
Observed: That the money is coming in much more strongly in 2024 is a very good sign indeed that LA28 is turning the corner financially. It had a small employee count at the end of 2023 – just 157 – but is adding staff quickly and now with more than 250 on hand, and moving to new offices at the eastern end of downtown Los Angeles in mid-year.
The deficit on paper is huge, but the statement details show that the cash is starting to come in. As was the case with Paris for 2024, being careful on spending and realizing the enormous ticket sales potential, budgeted at $2.5 billion, is going to be the key to financial success.
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