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The Los Angeles City Council approved the “Games Agreement” with the Los Angeles 2028 Olympic and Paralympic Games organizing committee by an 11-2 vote after a discussion of almost 90 minutes on Friday.
Eight of the 13 Council members spoke and asked questions of City Legislative Analyst Sharon Tso and City Administrative Officer Matt Szabo and LA28 Chair Casey Wasserman, who appeared by video.
The most dogged questioner was 11th District Council member Mike Bonin, who continually asked about the financial guarantees of the City, and then why the Games Agreement did not give the City “the power to dictate [to LA28] on some of these value-driven issues that are ancillary perhaps to the functioning of the Olympics, but vital to our neighborhoods and the people in them” such as homelessness, hiring and labor.
Fourth District Council member Nithya Raman asked why the City had given any financial backing to the organization of the Games and why the situation was not the same as for the 1984 Games, when the City had no financial responsibility. She was informed that those decisions were made prior to the signing of the Host City Contract by Mayor Eric Garcetti back in 2017. She and Bonin voted against the Games Agreement; the 11 others voted in approval.
Wasserman explained how a tight budget in 2028 would be handled the protect the City:
“We have a $615 million contingency built into that $6.8 billion [budget] number, but before we would get to a loss, the last $270 million – if you think about like a … bucket of money being used – the City would control every expenditure for that last 270, from essentially 270 to zero, so in other words, LA28 would lose control over its spending before it got into a deficit.”
Asked about future budget revisions, Wasserman noted, “Our plan will only change for two reasons: an increase in revenue or a decrease in expenses … our budget is very controlled and will only get more efficient and more effective …
“Our costs, we understand what they are, and we are continually evaluating how to make that plan better, but we have nothing that we’re building that would force us to drive the costs up.”
Tso added that a $615 million contingency amount is built into LA28’s budget, “So for LA28 to be able to tap in to use it, they would need City approval to do that.” The City would, at the point where LA28 would access that contingency amount, be working with LA28 to reduce the cost of the Games to assure financial performance.
Szabo explained the oversight process: “As we are heading in, we will just have to have active assessment of how they’re doing on their fund-raising. If we see that they’re off-schedule, we will expect and we will demand plans from them to adjust. And if their revenue is coming in as it should, then we would expect they would adjust on the expenditure side.”
Wasserman reiterated his confidence in the LA28 financial situation, adding “over 50% of our expenses are contracted in revenue today, and so we’ll have plenty of financial ability to operate the Games fully without calling on the City to do anything.”
A system of reporting to the City is set up in the Games Agreement for every six months.
The other Council members were generally positive; budget hawk Paul Krekorian (Second District), opined “I can’t see a significant risk here to the City of any exposure at all. If there is any exposure, its going to be limited because of our engagement and even if we fail in all of that engagement, it’s capped. So that gives me a lot of comfort.”
The agreement now goes to Mayor Garcetti for signature.
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The USA Gymnastics reorganization plan before the U.S. Bankruptcy Court for the Southern District of Indiana overwhelmingly passed in the vote circulated to claimants for sexual abuse and other matters.
The vote totals were posted late Thursday (2nd) and in the critical Class 6 – for abuse claims – a total of 505 ballots were received and after eliminating 29 invalid ballots, the proposal was accepted by 476-0.
The balloting for Class 5 – general claims – was also accepted by 61-1 (86 ballots were received; 24 invalid); these were for varying smaller claims from $44.26 up to $83,202.88 for unpaid bills for hotel stays, travel, apparel and so on.
The Class 8 indemnification claims – primarily by Bela and Marta Karolyi and their affiliates – were also accepted by a 6-0 vote; no dollar amounts were posted for these claims. The one Class 9 Future Claimant Representative claim and the seven Class 10 claims for abuse filed after the bar date were also accepted unanimously.
This means that a hearing will be held on 13-14 December to confirm the plan, which will allow the process to commence for payment of most of the claims. According to the Disclosure Statement, a fund of $400,659,129 is provided for the abuse claimants, of which all of the insurers have agreed except TIG Insurance Company, against which there are claims of $106,201,818 (26.5% of the total).
The deadline for TIG to join as a settling insurer is 13 December, the company has indicated it will file objections to the plan today (3rd). If it continues to refuse to settle, the non-TIG claims can be paid through a trust to be set up in early 2022. As a hold-out – and with more than a quarter of the financial burden – TIG can insist on going to trial for all 199 claims against it.
The acceptance of the plan is a major step forward in the process of completing the USA Gymnastics bankruptcy case; however, if TIG decides to go to trial – or to try to settle these cases individually on more favorable terms to it – the Nassar abuse scandal will continue to be in the headlines for months and years to come.
~ Rich Perelman
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