A battle is brewing between Los Angeles city officials and the organizing committee for the 2028 Olympic Games over who should benefit from billions of dollars in event contracts. During a tense city council committee meeting on Tuesday, council members pressed LA28 Chief Executive Reynold Hoover to prioritize businesses located within the City of Los Angeles, arguing the city is shouldering the primary financial risk.
The public interrogation highlighted a fundamental disagreement: city officials want to ensure local constituents reap the economic benefits of hosting the global event, while Olympic organizers are focused on preventing budget overruns. LA28 has a $7.1-billion budget that it must maintain, with any shortfalls becoming the responsibility of city taxpayers.
Hoover stated he would work to ensure L.A. businesses get their fair share, but cautioned that restricting contracts to only city-based firms could stifle competition and drive up expenses, ultimately jeopardizing the budget.
A $4 billion dollar question
At the heart of the dispute is an estimated $4 billion in contracts required to stage the month-long Olympics and Paralympics. These business opportunities range from providing catering at venues and installing security fencing to supplying portable toilets and constructing specialized facilities like the equestrian cross-country course. Of that total, approximately $1 billion is expected to be awarded to small businesses.
LA28's current procurement plan aims to award 75 per cent of this work to "local" companies. However, the committee’s definition of local is broad, encompassing any business based in the five-county region of Los Angeles, Ventura, Orange, Riverside, and San Bernardino counties. This region is home to nearly 19 million people and a vast number of businesses, many of which operate under different regulatory and cost structures than those within L.A. city limits. This wide-net approach has not been well-received by city officials, who argue that the economic benefits should be more narrowly focused on the city that serves as the Games' epicentre and financial guarantor. Further details of the organizers' spending plans have been a point of interest for some time, with the overarching goal to keep millions in spending local. In San Francisco, officials launched a similar initiative, where a $25 million fund was created to boost small businesses.
'First in line' for contracts
City council members were adamant that Los Angeles businesses deserve preferential treatment. The city has a unique agreement with the organizers that makes it financially liable for the first $270 million in cost overruns. The state of California would cover the next $270 million, but any further debt would once again fall to the City of Los Angeles.
If I focus solely, first and foremost, on the city of L.A., for . small business, then I am artificially reducing the pool of competition, placing greater risk on city taxpayers and placing greater risk on the [financial] backstop of the city of L.A., because prices will go up when there is no competition.
“When the city of Los Angeles is the first on the hook for the financial shortfalls in producing these Games, our businesses in the City of Los Angeles should be . first in line” for contracts, said Councilmember Monica Rodriguez during the meeting.
Council President Marqueece Harris-Dawson supported this view, noting that businesses in L.A. often face higher costs due to greater regulation, including measures that ensure fair wages and worker protections. He argued these companies might lose bids to competitors from neighbouring counties with lower overheads. Harris-Dawson said LA28's five-county plan “misses the mark,” considering the city's direct financial stake and historical investments in venues like the Coliseum.
Councilmember Hugo Soto-Martinez voiced his distrust for the LA28 board, stating, “We have to go to our constituents and say that we are fighting for them to make sure that they’re going to get as much business as they can out of this event.” In response, the committee formally demanded that LA28 commit to a specific dollar amount for city-based contracts and develop a program to certify that companies are genuinely located in Los Angeles, preventing out-of-town firms from using a local P.O. box to qualify.
A precarious financial balancing act
Hoover, a retired Army general whom council members addressed as 'General,' resisted committing to the council's demands. He maintained that his primary duty is to protect the Games' privately-funded budget and, by extension, the city's taxpayers. He warned against hiring L.A. businesses that might charge “premium Olympic prices.”
The tension underscores the immense financial pressure on Olympic organizers. Historically, the Olympic Games are notorious for exceeding their budgets. A 2020 study by the University of Oxford found that every Games since 1960 has run over budget, at an average of 172 per cent. While LA28 plans to avoid costly new construction by using existing venues, its operational budget remains a significant concern for a city already managing complex financial obligations, as seen in the latest Los Angeles County budget preview.
Managing massive urban projects is a challenge faced by major cities worldwide, including projects like Sydney's $100m transformation of the Barangaroo cavern, which also require careful balancing of public benefit and fiscal responsibility. For Los Angeles, the debate is not just about dollars and cents, but about fulfilling the promise that hosting the Games will directly enrich the host community.
While Hoover assured the council committee that LA28 was actively conducting outreach in all council districts to inform local companies about procurement opportunities, he gave no sign that the organization would agree to a city-first mandate. The chief executive did, however, pledge to return to the council with more specific information on the procurement strategy as it develops.
