Los Angeles is on the hook for a potentially infinite amount of money to bail out the 2028 Olympics after the City Council approved a deal critics say provides little oversight or protections over how a private organizing committee will run and finance the massive event.
In an overwhelming 10-4 vote to be signed by LA Mayor Karen Bass, the city council approved a deal critics say could bankrupt LA because it fails to provide proper safeguards to a risky, outdated agreement struck with the organizing committee during the bidding process for the games nearly a decade ago.
'Something SHADY is happening at City Hall,' said LA City Controller Kenneth Mejia as he attempted to rally support against the so-called Enhanced City Resources Master Agreement (ECRMA). 'The people of LA were promised a “Zero-Cost” Games,' he continued on X, adding: 'This was a terrible and financially irresponsible deal to begin with and it's a shame we didn't use the opportunity today to protect us even more and fight for greater transparency and accountability from LA28.'
Despite opportunities to add oversight frameworks in 2021 and again earlier this month, the city agreed to act as the financial backstop with no cap on the amount it might be forced to spend to cover expenses if the games fail to run a profit.
If the organizing committee, LA28, incurs massive financial losses, it would cover up to $600 million. The state would absorb the next $270 million. After that, the city’s general fund, which pays for basic services with taxpayer money, would cover any remaining shortfall.
'Throughout the course of the last decade, there were many ways in which the city could protect our tax dollars,' said Mejia, who has endorsed Bass' opponent Nithya Raman in the mayoral race.
'We could have put in some protections to protect the city and also provide better transparency and accountability on what the hell LA28 is going to spend their money on, because like I said, if they go over budget, the city is on the hook y'all,' he added.
Raman was one of four who voted against the agreement, which laid out various processes by which Los Angeles will seek reimbursement for municipal services rendered during the Olympics.
Los Angeles taxpayers are on the hook to spend an unlimited amount of money if the 2028 Olympics fail to turn a profit due to a 2017 deal with the event's organizers
The risks of the deal are elevated for Los Angeles as Mayor Karen Bass oversees a $1 billion budget deficit that has already left some of the city's municipal services partially operational
Los Angeles Controller Kenneth Mejia has called the city's deal with LA28, the organizing committee of the 2028 Olympics, 'terrible and financially irresponsible'
The first is a new private $270-million contingency fund set up by LA28 that the city can tap in the case of cost overruns before pulling from its general fund – aka taxpayer money.
The second key part of the deal establishes that the city will seek reimbursement for the cost of policing, which is expected to be the most expensive part of hosting the games, from a $1 billion federal fund set aside for security spending during the Olympics.
LA28 has committed zero dollars to security spending within its $7.1 billion budget, and critics of the ECRMA have said that there is no guarantee all of the federal money will go to Los Angeles.
Even if every single dollar does go to the city, Los Angeles Police Chief Jim McDonnell has estimated that personnel costs from his department alone could be as high as $1.15 billion.
That would immediately drain the contingency fund by $150 million and leave just $120 million remaining for other costs.
And that also assumes that the city would have access to the full $270 million.
The ECRMA states that if LA28 does not turn a profit and runs out of revenue, it has first access to the contingency fund to pay off any costs it still owes.
'LA28 has no real incentive not to bankrupt us,' Strategic Actions for a Just Economy spokesperson Chris Tyler said in a public statement.
Mayoral candidate Nithya Raman was one of four city councilmembers who voted against a deal last week that critics say provides few safeguards against the 2017 deal with LA28
According to the 2017 deal, Los Angeles is required to cover any cost overruns of the 2028 Olympics with city taxpayer money
'And if they come in under-fundraised and over-budget, taxpayers will be on the hook for billions of dollars potentially.'
If the 2028 Olympics does lose money, LA28 has a previously existing $330 million contingency fund it can tap.
The second, newly established $270 million fund is accessible first by LA28, then by the city for any costs it owes under the deal.
If the city still owes money after that, it can go to the California State government to request yet another $270 million worth of reimbursements.
But beyond that, Los Angeles would be responsible for covering any costs with taxpayer money, up to an unlimited amount.
The potential financial burden for LA threatens to overshadow preparations for the 2028 Games, where it's hoped Team USA stars like Katie Ledecky and Caeleb Dressel will bring home a record gold haul.
And the agreement comes despite Los Angeles already experiencing a $1billion budget deficit that has left several municipal services only partially operational, a fact that former LA Mayoral candidate Spencer Pratt made hay of during his viral campaign.
'Despite record revenues, I see no real plan for the streets, sidewalks, parks, and streetlights,' Pratt told the California Post during the campaign. 'She is continuing her wasteful spending.'
Los Angeles will have access to some federal and state funds to seek reimbursements, but anything beyond that must be covered by taxpayers. A US athlete during the 2020 Tokyo Games is pictured
LA28 will have first access to a $270 million fund that was established by a city council vote last week. Team US athlete Katie Ledecky is pictured during the 2024 Paris Olympics
LA28 also has an existing $330 million fund it can tap if the event fails to turn a profit. Team US athlete Caeleb Dressel is pictured during the 2024 Paris Olympics
Pratt lost to Bass and Raman, who was among the four councilors who tried but failed to introduce amendments that would have provided oversight and safeguards.
These included obligating LA28 to use revenue surplus to pay off any unpredicted municipal expenses before it can declare its profit, as well as the ability to audit the Olympics' finances during the games.
Of the current framework, Raman said on X: 'We only have audit rights if we need to ask for state or federal funding - and that happens only after the Games are over and the money has already been spent!'
The other key amendment would have placed caps on the city's financial liability for municipal services, particularly the enormous expected cost of security.
The ECRMA was passed 10 months late, as it was originally due on October 1, 2025. The time crunch created pressure among city officials to get the deal done, despite reservations.
'Every additional month of delay reduces the run for detailed planning for our businesses,' said Jacqueline Iniguez with the LA Area Chamber of Commerce in a public statement.
'The city and LA28 now need to move forward together quickly to keep the 2028 games on track.'
Amid the worry, City Administrative Officer Matt Szabo has dismissed anxieties that Los Angeles could be bankrupted by the Olympics, emphasizing that the city will only be on the hook to pay if the event does not turn a profit.
Raman and other city councilors have unsuccessfully attempted to pass amendments to the 2017 deal that would have included stronger safeguards
City Administrative Officer Matt Szabo has emphasized that Los Angeles will only have to pay if the Olympics fail to turn a profit and dismissed critics' anxieties
'Is that a likely scenario? We don’t believe so,' Szabo said. 'Their reports thus far have suggested that they are meeting their targets on their sponsorships and on other revenues, and we want them to continue to hit their targets.'
'We are joined at the hip here,' he added. 'They want a successful Olympics. They want to have a successful legacy for those '28 Olympics. We want a successful Olympics.'
The Daily Mail has reached out to Mayor Bass's office for comment.
