David Owen

Transparency is a buzzword in international sport, even if to my mind it is a concept still more honoured in the breach than the observance.

So let’s give the International Olympic Committee (IOC) a little credit for accompanying yesterday's heavily-flagged announcement that Los Angeles is entering a one-horse race for the 2028 Olympics and Paralympics with publication of the, as yet unsigned, host city contract.

The 46-page document offers some insight into where the IOC’s agreed $1.8 billion (£1.4 billion/€1.5 billion) contribution to the Los Angeles Organising Committee is coming from - and why the Los Angeles Bid Committee felt able to claim that it has "the potential to exceed $2 billion (£1.5 billion/€1.7 billion)".

The biggest component - $898 million (£680 million/€761 million) - and there is little surprise here, comes from broadcasting. The IOC has reason to think this is affordable, having already signed a mammoth $7.7 billion (£5.8 billion/€6.5 billion) deal, averaging out at more than $2.5 billion (£1.9 billion/€2.1 billion) per Olympic quadrennium, for United States broadcasting rights to the Games between 2021 and 2032.

The Los Angeles 2024 bid book budgeted $855 million (£647 million/€725 million) from this source, so it may be that this figure has merely been adjusted for another four years of inflation.

It is estimated that a further $437 million (£331 million/€370 million) may be derived from the IOC’s international sponsorship and licensing programmes.

This compares with a 2024 bid book figure of $453.5 million (£343.3 million/€384.3 million). However, this is also what gave LA grounds to claim that the IOC contribution might ultimately reach or exceed $2 billion. The new contract refers to potential renegotiations or renewals which are "forecasted to generate an estimated increase of $200 million (£151 million/€169 million) in the amount indicated below".

So, $898 million, plus an estimated minimum of $437 million: that yields a running total of $1.335 billion (£1.011 billion/€1.131billion), still some way short of $1.8 billion.

The rest of the IOC’s contribution, as far as I can make out, seems not to be in cash.

The IOC are set to ratify the plan to have Paris host the 2024 Olympics and Paralympics and Los Angeles stage the 2028 Games at their Session in Lima on September 13 ©Getty Images
The IOC are set to ratify the plan to have Paris host the 2024 Olympics and Paralympics and Los Angeles stage the 2028 Games at their Session in Lima on September 13 ©Getty Images

The Host City Contract values services to be provided by Olympic Broadcasting Services at $340 million (£257 million/€288 million). This compares with $321 million (£243 million/€272 million) spent on Rio 2016.

It also estimates the fair market value of assistance and knowledge-transfer from IOC entities at $125 million (£95 million/€106 million).

Add those two figures onto our running total of $1.335 billion and you reach exactly $1.8 billion.

It is worth adding that any surplus derived from the Games - and Los Angeles 1984 produced a surplus of more than $200 million - will remain in the United States: the United States Olympic Committee (USOC) would take 20 per cent, with the balance to be used for "the general benefit of sport and youth" in Los Angeles and the nation at large.

In 1984, the equivalent split, according to Organising Committee head Peter Ueberroth’s book Made in America, was 60 per cent to the USOC and 40 per cent to Southern California.

IOC revenues totalled $5.7 billion (£4.3 billion/€4.8 billion) in 2013-2016. If one prognosticates that they might reach something like $7 billion (£5.3 billion/€5.9 billion) by 2025-2028, it suggests that the IOC envisages earmarking very approximately 20 per cent of quadrennial income to the Los Angeles 2028 Organising Committee.

Under the traditional timetable, these Games would have been awarded in 2021. However, the contract suggests that the plan is to get straight down to work.

The Organising Committee is to be formed, seemingly, within five months of the contract’s execution.

A marketing plan agreement between the IOC and the Organising Committee is to be executed by the end of next year, almost a full decade - prospective sponsors please take note - before the Games actually take place.

Assuming full agreement is reached and rubber-stamped, money is to start flowing to LA almost immediately.

It was confirmed announced that Los Angeles had agreed a deal to host the 2028 Olympic and Paralympic Games ©Getty Images
It was confirmed announced that Los Angeles had agreed a deal to host the 2028 Olympic and Paralympic Games ©Getty Images

The contract would commit the IOC to paying $180 million (£136 million/€152 million) of the money from broadcasting, in quarterly installments of $9 million (£6.8 million/€7.6 million), to the Organising Committee over a five-year period beginning, at latest, on January 1, 2018.

As already reported, the document also clears LA to spend a maximum of $160 million (£121 million/€135 million) of the IOC money to "support projects related to the development of youth and sport-oriented activities" in Los Angeles before the Games - possibly a prudent measure given the need to nurture and sustain public support for the Olympic project over an inordinately long lead-time.

Money will eventually come flowing back to the IOC as well.

The contract entitles Lausanne to 7.5 per cent of ticketing and hospitality revenues. At the 2024 bid book figure of nearly $1.8 billion, that would amount to more than $130 million (£98 million/€110 million).

The IOC’s cut of Los Angeles’ local marketing programme would similarly be 7.5 per cent of cash payments and five per cent of value-in-kind. The LA2024 bid book foresaw $2.25 billion (£1.7 billion/€1.9 billion) of income being generated from this source.

A couple of further details:

The contract would commit the Organising Committee to pay the International Paralympic Committee (IPC) a lump sum of up to $18.975 million (£14.356 million/€16.058 million) for a bundle of rights including worldwide broadcasting.

It is governed by Swiss law.

To read the full host city contract click here.