The Los Angeles Revolution — 1984, the Day the Olympics Turned a Profit

In the previous episode, we watched the 1976 Montreal Games become a burden that saddled its citizens with decades of repayment, and saw the Olympics tilting toward becoming a festival nobody wished to host. The only city said to have effectively stepped forward for the 1984 Games was Los Angeles, alone. Far from an honor, it was the short straw — taking on the risk of fiscal ruin. That was the state of the Olympics at the time.

And yet it was precisely this 1984 Los Angeles event that became the turning point dividing Olympic history in two. It was the first Games where neither handmade idealism nor national prestige, but ‘business,’ set out to save the Olympics. The man behind it was a single manager from the travel industry: Peter Ueberroth.

The constraint of not spending a single tax dollar

There was a peculiar precondition under which Los Angeles took on these Games.

The citizens refused to spend tax money on the Olympics. In a 1978 referendum, the city of Los Angeles is said to have established that it would not cover any cost overruns of the Games with municipal funds. Having witnessed the disaster of Montreal, the public’s wariness ran deep. In other words, the organizing committee had to run an enormous festival on its own earnings alone, without the safety net of public money.

By any ordinary reckoning, this was a fatal constraint. But the Los Angeles Olympic Organizing Committee (LAOOC), led by Ueberroth, turned the limitation to its advantage. If taxes could not be used, then private money would cover it. Sponsorship fees, broadcast rights fees, ticket revenue — every pillar of income would be gathered from the market, and spending would be cut to the bone. Rather than recklessly building new competition venues, they would borrow and use university dormitories and existing stadiums. It was a way of thinking that recast the Olympics from a ‘public works project’ into a ‘business that could turn a profit.’

Ueberroth himself was not a man of the sporting world. He was a manager who had built up a travel services company in a single generation, and what he brought was not the ideal of competition but a businessman’s mindset of putting the books in the black. A man not of principle but of calculation. One could say that very strangeness was what the Olympics in crisis needed.

The reverse logic of ‘narrowing’ the sponsors

Among Ueberroth’s strategies, the one that stood out most vividly was his sponsorship policy.

Until then, it had been taken for granted at the Olympics that you gathered sponsorship money from as many companies as possible. But the LAOOC went the opposite way. It selected only a single official sponsor per industry category, and in exchange demanded a high sponsorship fee. Soft drinks went to Coca-Cola, fast food to McDonald’s, credit cards to Visa — in this way, it sold the ‘exclusive rights’ of each field.

For a company, the brand value of locking out its rivals and tying itself to the Olympics was worth paying that much more for. By narrowing the number of sponsors, the value and the fee per company instead leapt upward. Through this logic of ‘narrowing down,’ the committee is said to have earned over one hundred million dollars from corporate sponsorship alone.

Records were set in broadcast rights as well. Ueberroth negotiated with the American network ABC and is reported to have concluded a contract for broadcast rights worth over two hundred million dollars. What is more, by applying the advance payments to operating funds, he weathered the difficult problem of a shortage of cash on hand. Advance sponsorship fees, advance broadcast fees, ticket pre-sales — by layering many mechanisms to gather cash before the Games had even begun, the organizing committee sought to run an enormous festival without relying on borrowing.

There was ingenuity in the torch relay too. By soliciting the right to run segments of the route in exchange for donations, things that had previously been mere stagecraft were recast as opportunities for income. At a glance this may seem to spoil the ideal, but since taxes could not be used, every scene had to be reexamined through the lens of profit and loss. While there is criticism that he prioritized the bottom line over principle, one could also say that without such thoroughness there would have been no profit.

Keep new facilities to a minimum, and maximize income from the market. This approach of designing a surplus from both the spending and the income side would later come to be called the ‘Los Angeles model.‘

The light of profit, and its shadow

The 1984 Games were a great success financially. The organizing committee is said to have produced a surplus of over two hundred million dollars, and part of those funds is reported to have been passed on to a foundation supporting regional sports around Los Angeles, long devoted to nurturing youth athletics. The Olympics, once a symbol of deficit, left behind a surplus and even bequeathed assets to later generations — this was, indeed, a dazzling achievement.

This success changed the fate of the Olympics. A festival that no one had raised a hand for, out of fear of fiscal ruin, was suddenly reappraised as a ‘profitable enterprise,’ and subsequent bids once again took on the look of competition. Commercialization saved a dying Olympics — it is a fact that there are voices who assess it this way.

The shadow, too, begins here. The fact that sponsorship and broadcast rights had become the pillars of operations meant that the Olympics would become a festival strongly subject to the intentions of corporations and television. What to show, when, and how — into those judgments crept room for the convenience of those putting up the money. The expansion of the sponsorship system and the domination by broadcasting that we will see in later episodes trace their headwaters back to this year, 1984.

What Ueberroth demonstrated was proof that the Olympics could be run on the logic of the market. It was a third Olympics, different both from Coubertin’s modern Games that raised an ideal aloft and from the political Olympics that competed in national prestige — the dawn of an age in which money became the protagonist. Neither praise nor criticism alone can fully tell the story of these Games.

And so the Olympics changed their form into a machine for generating vast sums of money. What we will gaze upon next is the other heart that drives that machine — the story of how the television set in the living room came to dominate the Olympics themselves.