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Neither the Olympics nor the NFL will Rescue Los Angeles

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NOSTALGIA AND FINANCIAL FOLLY-We all tend to have fond memories of our greatest moments, and for Los Angeles, the 1984 Olympics has served as a high point in the city’s ascendency. The fact that those Summer Games were brilliantly run, required relatively little city expenditure and turned a profit confirmed all those things we Angelenos loved about our city – its flexibility and pragmatism and the power of its civic culture. 

After Boston turned down its chance to be the U.S. entrant in the sweepstakes to host the 2024 Olympics, it’s natural that Mayor Eric Garcetti and the city establishment, at least what’s left of it, would like a return engagement. 

But the Los Angeles of today barely resembles the vibrant, optimistic city of 30 years ago. 

A devastating report from the establishmentarian Los Angeles 2020 Commission recently intoned, that LA is “the city where the future once came to happen,”…but it is now… “living the past and leaving tomorrow to sort itself out.” 

So rather than being a bold move toward establishing the city’s preeminence, the current move smacks of a Hail Mary pass. It also seems to embody a kind of nostalgia, a sentiment reflected not only in the desire to relive Olympic glory -- but also in the efforts to bring pro football back to town, including, perhaps, a return of the long-departed Rams. 

Yet ultimately, neither a third Olympics (the first was in 1932) nor the return of NFL football can alter a city’s fate. After all, the 2000 Athens Olympics did not lead to a Greek renaissance, but may instead have contributed to that country’s fiscal morass. Summer Games in Montreal (1976) and Atlanta (1996) did not usher in a “golden age” for those cities, but rather periods of decline. 

In contrast, an Olympic city that is still doing well in the aftermath, like London or even Beijing, at least for the time being, can more accurately be said to have survived, rather than prospered from, its Olympiad. 

Nevertheless, there remains an alluring temptation to use sporting events to enhance a city’s standing. It’s much easier, for example, than improving basic infrastructure, reforming education or easing growth-strangling regulation. 

But attracting sports franchises has not turned cities around, as is evidenced in Baltimore. Sports teams may be important to local elites, and may thrill local residents, but they rarely provide the kind of economic boost that can reverse the decline of a fading city. 

Entrepreneurs ultimately matter more than sports stars.

There’s serious doubt whether Los Angeles can repeat its brilliant performance in 1984. At that time, the city had a strong and highly motivated business elite. This elite, closely tied to Mayor Tom Bradley, included twelve Fortune 500 firms that could help sponsor the Games and provide management expertise. 

Since the 1980s, the number of big firms in the city has fallen to three. The departure of such major corporations as Lockheed, Northrup Grumman, Occidental Petroleum and Toyota, suggests urban analyst Aaron Renn, has left LA’s once-vaunted corporate community as “a shell of its former self.” 

The weakening of the private sector, and the parallel rise of almost complete power of city employee unions, are adequate causes for skepticism about the likelihood that Mayor Garcetti and the labor-dominated City Council could produce a profitable Games. 

As former county Supervisor Zev Yaroslavsky has suggested, in 1984 there was an ironclad agreement that kept the city off the hook for any cost overruns. This time, there seems to be no such arrangement in place. 

Similar concerns about costs led leaders in Boston, the city the U.S. Olympic Committee initially chose to bid for the 2024 Games, to pull out. Bostonians were aware that, in many cases, Olympic Games – for example, in Munich, Montreal and Athens – have lost money, sticking taxpayers with the bill. 

London’s 2012 Olympics did not lose as much, but its economic payoff was minuscule, and actually turned out to generate less revenue than a normal summer tourism season. Overall, evidence suggests that hosting the Olympics has had little overall positive effect on local host economies. 

Repeating the success of 1984 may also be more difficult given the city’s rapid physical deterioration. The roads carry about the same proportion of traffic as three decades ago (despite all the transit investments) and are now in sorry shape, as any L.A. driver can tell you. Our roads are such a disaster today that the average LA motorist, by some calculations, must spend an extra $832 in vehicle maintenance, more than double the national average of $377. 

During the 1984 Olympics, Angelenos generally avoided the freeways, so getting around was almost absurdly easy. 

Nor can we expect roads to improve as the city pursues its Utopian vision of public movement dominated by transit, bicycles and walking. Los Angeles has no intention of making driving any easier as part of its mission to become, as one praising newspaper editorial put it, a “modern, multimodal city.” 

In a bizarre twist, in a city where trips by public transit boast a share in the single digits, city leaders predict 80 percent of spectators will get to Olympic venues by transit. Really? 

An even bigger problem may be an LA economy that looks painfully more like Athens than London, Beijing or, for that matter, even Boston. Los Angeles has suffered the largest decline of the 32 largest metropolitan areas in the nation in payroll employment growth since 1990, losing 3.1 percent of jobs, according to economists at UCLA. Back then, the Port of Los Angeles was booming. Now it’s struggling, and Hollywood has been losing market share as well. 

Perhaps the biggest change has occurred on the industrial front, which provided work for the city’s middle and working classes. According to recent rankings that Pepperdine’s Mike Shires and I compiled for Forbes, Los Angeles placed 59th in manufacturing growth out of 70 regions. While aerospace has led the charge, the City of Angels, like its longtime rivals New York and Chicago, has seen its once diverse industrial base erode rapidly, from employing 900,000 a decade ago to 363,900 today. 

As a result, the upwardly mobile Los Angeles of 30 years ago has pretty much morphed into a region whose class dynamics are increasingly bifurcated between a still-large affluent cohort and an ever-expanding population in poverty. Not only are housing prices high, but rents are high as well. In fact, Los Angeles now is the least-affordable city for renters, according to a recent UCLA study. The poverty rate also is among the highest of any major U.S. city, when housing costs are calculated. 

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If Yaroslavsky’s concerns about protecting taxpayers are addressed, it could still make sense to host the Games. A third Olympics could be used as an indicator of LA’s incipient turnaround. Similarly, the proposed migration of pro football franchises into the region – although not likely to be the city of Los Angeles – could also be marketed in this manner. 

Yet these positives will mean little more than fluff if Los Angeles and, by extension, the rest of the surrounding region, can’t address its basic challenges. Right now, LA has no clear path to long-term economic recovery. The tech industry remains overwhelmingly based in the north of the state, and these firms are now gunning for control of entertainment as well. 

The port is beset both by its own chronic mismanagement and by challenges from other cities, notably along the Gulf Coast. The Olympics and the return of the Rams, Raiders or Chargers would do little, if nothing, to address this.

A turnaround can take place only if the city addresses its woeful infrastructure and improves its miserable public education system. There’s also the fact that people with children are leaving Los Angeles faster than from any other major region of the country. The resurgence in violent crime could also get worse, as the poor, particularly minorities, become increasingly alienated and desperate. No surprise, then, that more than two-thirds of LA city employees live somewhere else. 

Even if these issues are not addressed, some people will clearly benefit from the Olympics. There will always be enough wealthy people and businesses to fill stadium luxury suites and enough national companies to buy stadium naming rights, even if, like Staples, they are far from being local companies. 

Politicians will get to cut ribbons and hobnob with the stars at Olympic events. But there’s little chance the Olympics would change the city’s basic trajectory. Although a boon for contractors, political trust funds and the associated influence peddlers and fixers, the overall economic impact of hosting major sporting events and stadia has generally been negligible, according to numerous studies. 

More worrisome, there is the danger that the hoopla over the Olympics and, possibly, the return of the NFL, will persuade local leaders that sports can cure what ails Los Angeles – and they will focus the city’s limited resources on such ephemera. 

Most Hail Marys are, after all, in vain.

 

(Joel Kotkin is executive editor of NewGeography.com, the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His most recent book is “The New Class Conflict” --Telos Publishing: 2014. Joel Kotkin lives in Orange County.) 

 -cw 

 

CityWatch

Vol 13 Issue 74

Pub: Sep 11, 2015

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