Los Angeles city leaders have approved a financial agreement for the 2028 Olympic Games that critics argue provides insufficient oversight and protections, potentially leaving taxpayers responsible for unlimited financial losses.
The City Council voted 10-4 to approve the Enhanced City Resources Master Agreement (ECRMA), a deal that Mayor Karen Bass is expected to sign. Opponents, including City Controller Kenneth Mejia, have labeled the agreement "terrible and financially irresponsible," warning it could lead to the city's bankruptcy.
The agreement, initially struck during the bidding process for the Games nearly a decade ago, comes despite opportunities to implement stronger safeguards in 2021 and again earlier this month. Under the terms, the city will serve as the ultimate financial backstop if the private organizing committee, LA28, incurs losses beyond its own contingency funds.
LA28 is set to cover up to $600 million in losses. The state of California would then absorb the next $270 million. Any remaining deficit would fall upon the city's general fund, which is used to finance essential public services.
Los Angeles Controller Kenneth Mejia voiced concerns over the lack of transparency and accountability regarding LA28's spending. "The people of LA were promised a 'Zero-Cost' Games," Mejia stated on X, formerly Twitter. "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."
Mayoral candidate Nithya Raman, one of the four council members who voted against the ECRMA, highlighted that audit rights for the city are contingent on seeking state or federal funding, which would only occur after the Games conclude and funds have already been spent.
Financial Safeguards and Contingencies
The ECRMA outlines several financial mechanisms. LA28 has established a new private $270 million contingency fund that the city can access before drawing from its general fund for cost overruns. Additionally, the city plans to seek reimbursement for policing costs, projected to be the most significant expense, from a $1 billion federal fund designated for Olympic security.
However, LA28 has committed no funds of its own to security within its $7.1 billion budget. Critics point out there is no guarantee that the full federal amount will be allocated to Los Angeles. Even if the entire federal sum is secured, LAPD estimates that personnel costs alone could reach $1.15 billion, potentially depleting the new contingency fund and leaving little for other expenses.
Furthermore, the ECRMA grants LA28 priority access to the new $270 million fund if the organization runs out of revenue to cover its costs. "LA28 has no real incentive not to bankrupt us," said Chris Tyler, a spokesperson for Strategic Actions for a Just Economy. "And if they come in under-fundraised and over-budget, taxpayers will be on the hook for billions of dollars potentially."
LA28 also has an existing $330 million contingency fund. After both LA28's funds are exhausted, the city can seek an additional $270 million reimbursement from the state government. Beyond these provisions, any remaining shortfall would be the responsibility of Los Angeles taxpayers, with no upper limit.
City's Financial Context and Criticisms
The agreement's approval comes as Los Angeles faces a $1 billion budget deficit, which has already impacted the operational status of some municipal services. Former LA Mayoral candidate Spencer Pratt criticized the decision, stating, "Despite record revenues, I see no real plan for the streets, sidewalks, parks, and streetlights. She is continuing her wasteful spending."
Council members like Raman attempted to introduce amendments to the deal, including provisions requiring LA28 to use revenue surpluses to cover unexpected municipal expenses before declaring profit, and allowing for audits of the Olympics' finances during the Games. Another proposed amendment sought to cap the city's financial liability for municipal services, especially security costs.
The ECRMA was approved 10 months past its original deadline of October 1, 2025. Jacqueline Iniguez of the LA Area Chamber of Commerce expressed concern over the delay, noting it "reduces the run for detailed planning for our businesses" and urged swift progress.
Despite these criticisms, City Administrative Officer Matt Szabo has downplayed fears of the city being bankrupted. He emphasized that Los Angeles would only be financially liable if the event fails to turn a profit, a scenario he deemed unlikely based on LA28's projected revenue targets. "We are joined at the hip here," Szabo stated. "They want a successful Olympics. They want to have a successful legacy for those '28 Olympics. We want a successful Olympics."