USOC Gets $488M Guarantee From '28 Games Joint Venture
The USOC will receive a $488M guarantee from the joint venture it created with LA 2028 to sell sponsorships to the ‘28 Games, exposing it to less risk than it originally agreed to when the parties were bidding for the ’24 Games, according to public documents. The $488M is 65% higher than the roughly $295M guarantee included when L.A. was bidding for the ’24 Games, a contract that had to be rewritten once the IOC gave Paris the hosting duties in '24 and pushed L.A. back four years. The growth is partly because the new deal covers an eight-year sales window instead of six, but also, the contract is structured differently to insulate USOC against unexpectedly low sales. The joint venture, U.S. Olympic & Paralympic Properties, launched earlier this year. The JV’s governing documents were finalized in August, but were not public until LA 2028 included them in a report to the L.A. City Council last week.
GOING INSIDE THE DEAL: In the old deal for the ‘24 Games, the USOC was scheduled to get 20% of domestic sponsorship sales up to $2.16B, and then 15% of anything beyond that. However, the guarantee was just $294.8M, only 75% of the “baseline” that planners believed the USOC would generate in an otherwise normal six-year period. This time, the USOC guarantee will be $488M -- the full amount experts believe the USOC would generate from ’21-28 without a home Olympics. The USOC will also get 15% of anything above $2.7B in sales. The guarantee is 19% of LA 2028’s $2.52B sales goal. According to a source familiar with the negotiations, LA 2028 agreed to assume more risk in exchange for greater operational control, making the deal more akin to a purchase of rights than a joint contribution of assets. It is not known exactly how LA 2028 now has more control; the governance terms were not included in the public documents. LA 2028 in the old contract controlled four seats on a six-person board, but gave the USOC veto power over key decisions such as hire/fire the CEO, final determination of category definitions, pricing, use of USOC assets and others.