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Not so fast: LA still has business to settle on road to '28

Not so fast: LA still has business to settle on road to '28 Photo: AP

By EDDIE PELLS
August 08, 2017 07:00 PM

LONDON (AP) — About that deal to bring the 2028 Olympics to Los Angeles: Not all is set in stone.

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Sometime over the next five weeks, leaders from LA and the U.S. Olympic Committee have to iron out financial details about their joint marketing agreement that will figure heavily into the USOC's ability to fund its athletes and sports organizations through those 2028 Games.

Sorting out the agreement is one of the biggest hurdles to clear before the IOC meets the week of Sept. 11 in Lima, Peru, to approve Paris to host the 2024 Olympics and Los Angeles for 2028.

When a city is awarded the Olympics, it also takes over its country's domestic sponsorship program for a six-year period leading into those Games. The idea is to prevent the country's Olympic committee and the host city from selling competing sponsorships for essentially the same product.

In the United States, where individual sponsorship deals can reach into the tens of millions, that has resulted in delicate negotiations that haven't always ended well and have hurt the chances of past bids in Chicago and New York. Deals with those cities were finalized at the last minute and some International Olympic Committee members have used the uncertainty as a reason to vote against the U.S. cities.

But early in the process of the 2024 bid, LA and the USOC locked in their deal. It was a six-year agreement in which the USOC was to receive 20 percent of the revenue — worth somewhere around $380 million — from the domestic deals that LA expects to negotiate.

With LA now in position to host in 2028, the USOC and LA will try to expand that deal to eight years — from 2021-28. USOC CEO Scott Blackmun and LA chairman Casey Wasserman will talk soon about whether the 20-80 split will remain in place, and what other details need to change.

"I'm confident that we'll find a deal that's good for our athletes and (national governing bodies), and also good for LA 2028," Blackmun told The Associated Press.

Los Angeles also has motivation to make a good deal for both sides. The last thing leaders there want to do is weaken Team USA, which will be competing on home turf in the Summer Games for the first time in 32 years.

Wasserman said the parties are close to finalizing a revised agreement.

"USOC Chairman Larry Probst ... Scott Blackmun and I have been good friends for more than 20 years and we look forward to continuing our successful partnership for the next 11 years," Wasserman said.

And yet, this could wind up more complex than a mere rubber-stamping of an extension of the same deal.

At stake is something in the neighborhood of $60 million a year, which totals up to about one-third of the USOC's typical budget over a four-year cycle. The USOC puts $75 million or more each year into direct support to athletes and the governing bodies that run the sports. The USOC is in a unique position because it does not receive government funding to support the athletes, and thus, doesn't have an obvious way to make up any shortfall.

Even if the numbers work out, the USOC will feel some pain. Essentially, its marketing department, which employs about 50 people and is in charge of soliciting domestic partnerships, will become a shell of itself because LA takes charge of the deal-making. Some of those employees might lose jobs.

To give up that much control, Blackmun will want to cut a fair deal for the USOC. Ultimately, his goal is to retain an amount that would equal 20 to 30 percent of the USOC's overall revenues (The federation averaged about $240 million in revenues over the last two years) so the U.S. team will have resources to remain dominant in 2028 and beyond.

LA is also seeking assurances, given the greater financial uncertainty that exists under an 11-year preparation window instead of seven.

According to the 2024 and 2028 hosting contracts, the $1.8 billion to $2 billion it is receiving from the International Olympic Committee is between $100 million and $300 million more than it would have gotten had it won the 2024 hosting rights.

LA did add one provision that allows it to spend a portion of the money on youth sports programs before the Olympics, and another that states all amounts will be calculated in 2028 value, though the contract gave no specifics of how that would work.

Credits

By EDDIE PELLS

Copyright 2017 The Associated Press. All rights reserved.

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