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≡ THE BIG PICTURE ≡
In November 2021, LA28 Chair Casey Wasserman told the Los Angeles City Council:
“[A]s we sit here today, with well over half our revenue contracted, and we are prepared to deliver the Games – if we had to – with the revenue we have today.
“Now we don’t believe that [$6.884 billion] will be our final revenue number. We feel very confident in our ability to drive revenue over the next seven years because of the economic platform that is both Los Angeles and the United States, and our ability to leverage incredible venues, incredible universities, incredible civic locations to make these Games truly unique.”
Three years later, Wasserman and others – including Chief Financial Officer Karen Sturges last July – have told City Council committees that LA28 has 64% of its $6.884 billion revenue target already under contract. Sturges told the Ad Hoc Committee on the 2028 Olympic and Paralympic Games:
“On the revenue side of the $6.9 [billion budget], we do have 64% of that number secured. The cash has not come in, we haven’t recognized it, but it is contractually secured. We feel very good about that. We feel like we’re ahead in terms of other organizing committees at this time and have a path to achieve 100%.
“By the end of this year, we will publish a new budget, which will show the contingency amount with a lot greater fidelity on the costs of commodities, services and what not.”
Last week, Wasserman was asked about the sources of that 64% at a news conference with the International Olympic Committee’s Coordination Commission, and explained that beyond the funding from the IOC:
“Our revenue streams that are contracted today are hospitality-ticketing, sponsorship and licensing.”
It’s the first time those specific areas have been confirmed, to make up the $4.4 billion in contracted revenue. So, that 64% is coming from:
● International Olympic Committee, via the Host City Contract (more on this below);
● Sponsorships, of which more than $1.6 billion has been contracted, according to comments Wasserman made to the Los Angeles Times;
● Hospitality and ticketing commitments, led by hospitality provider On Location, with ticketing services being provided by AXS and Eventim;
● Licensing, led by a large commitment by Fanatics, and an already long list of licensees of various categories and products.
What’s the breakdown?
The IOC’s 2028 Host City Contract, signed in 2017, promises $898 million to LA28 from television rights sales and an estimated $437 million share of the IOC’s TOP sponsorship revenues. The contract also projects an additional $200 million to LA28 from renewals and renegotiations of sponsorship agreements. That’s a total of $1.535 billion.
However, the IOC has lost three TOP sponsors post-Paris, with Japanese companies Bridgestone, Panasonic and Toyota stating that they will not be renewing their sponsorship agreements.
At last week’s news conference, Wasserman confirmed that the IOC payments are now expected to be “a little less than $1.5 [billion].”
So if the 64% contracted revenue number is about $4.4 billion, where does LA28 stand? Wasserman demurred on any details, but let’s project it this way:
● The IOC is now covering perhaps $1.4 billion now, instead of $1.535 billion. But there could be more, perhaps, with a share of significant increases in television rights sales for the IOC, notably in India with the addition of cricket to the program?
● Wasserman told The Times last December that LA28’s own sponsorship commitments were up to $1.6 billion out of a planned $2.52 billion. With a handful of added partners announced since then, perhaps the total is $1.7 billion?
● Hospitality and ticketing guarantees, especially from On Location, could be as high as $1.0 billion, out of an expected $1.93 billion total in the LA28 budget.
● Licensing and merchandising would then be left at about $300 million in guarantees to get to $4.4 billion overall.
Those are guesses, but they add up to $4.4 billion, or 64% of the $6.884 billion revenue target. The loss of IOC monies below the $1.535 billion number creates a hole – that $200 million in renewals was included – but there is time yet.
On the LA28 Web site now – more than three-and-a-half years out – 30 companies are listed as partners, sponsors, supporters and licensees of the organizing committee:
● 2: Founding Partners: Comcast, Delta
● 3: Hospitality & Ticketing: AXS, Eventim, On Location
● 2: Official Sponsors: Cisco, Lilly
● 5: Official Supporters
● 3: Official Licensees for various apparel
● 15: Licensees, led by Fanatics
In contrast, by mid-2021 – three years prior to the 2024 Games – the Paris organizers had announced three “Premium Partners” and four “Official Partners.” By the year-to-go mark, there were six Premium Partners, 14 Official Partners and 28 Official Supporters.
By the time of the Games in 2024: seven Premium Partners, 13 Official Partners and 50 Official Supporters, a total of 70 companies in the top three tiers, 63 of whom came on in the final 36 months prior to the Games. LA28 has a lot of selling to do, but also has time to do it.
All of this, of course, assumes that the $6.884 billion cost budget does not increase significantly – there is a $615 million contingency allowance – and Sturges indicated a revised forecast will be available by year’s end.
A lot of folks will be counting on that.
¶
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