In honor of Tax Day, we’re continuing our ongoing research into the financials of the shadowy groups behind the Olympic Games. We all know how Amazon and Facebook manage to avoid income taxes, but the IOC and other Olympics-boosting orgs have been in the game of tax dodging since before these tech titans were born, hiding behind the facade of non-profit corporations.
The LA84 Foundation was created to manage the surplus from the 1984 Olympics. While ostensibly funding youth sports and other community athletics initiatives, the way they invest and spend their money (which, rightfully, should have been public assets…) is more tied to how wealthy elites exploit tax laws for their own benefits. LA84 functions largely as a slush fund to channel public money into investments and jobs for elites and elite interests while maintaining the collective fiction of public work.
If they kept to themselves that would be… one thing, but in pretending to maintain a public mission like youth sports, LA84 allows the Mayor and City Council to sports-wash harmful processes like displacement and gentrification, policing of vulnerable populations, and stadium-led displacement.
So how do they manage to do this? While there are several types of non-profits as defined by their tax status, the most commonly recognized form are 501(c)(3) organizations, which are defined as related to “religious, charitable, scientific, literary, or educational purposes, or for testing for public safety, or to foster national or international amateur sports competition….” 501(c)(3) organizations can be created as charitable foundations or “private foundations.”
Why is the LA84 Foundation a private foundation instead of a charity? And why does that matter? Private foundations make up less than 10% of total 501(c)(3) organizations. While they can operate their own programs, they exist primarily to fund other charitable organizations and actions. There is an entire subclass of these tax-advantaged “private foundations” that purport to have a public mission, but operate in practice as tax shelters for the ultra-rich.
Many millionaires and billionaires use “family foundations” to protect themselves from estate taxes in this very same way (think Chan-Zuckerberg, the Walton Family Foundation, or the many foundations disclosed in the Panama Papers). These charities do very little actual charity work and are only required to make a minimum 5% annual asset distribution. All of passive income (stocks) or high-yield asset appreciation for these organizations are thus only effectively “taxed” at the rate of 5%, while the private foundations continue to profits off the ever-increasing assets. The benefactors of these foundations can even appoint themselves or their family members as salaried members of the foundation.
So how does this all relate to sports and the Olympics? First, the IOC – perhaps the most massively-corrupt of the bunch – is headquartered in Switzerland, which not coincidentally happens to be a notorious tax haven. However, since they do a large amount of business in the United States, they do file tax reports as a non-profit that allow us a glimpse into their spending. From their publicly-available records, we know that they bring in a massive amount of money, most of which is dispersed to national Olympic committees rather than any “games-related” costs. And where does that money go? One recipient of those dispersals would be the United States Olympic Committee (USOC), which functions as a non-profit (amateur sports were written into the tax code in the 1960s) and also makes their tax reports available to the public.
Although the USOC is a 501(c)(3) organization, because they solicit money from the public, corporations and, governments, they have to be much more transparent (as far as these things go) about where their own money goes. Still, it was only after public outcries in 2012 that they were called to account for paying exorbitant employee salaries – people don’t like donating to public organizations who pay executives multi-million dollars while pretending to be charities. While not an efficiently-run or good organization itself though, USOC disburses much more money to sports groups (if not that many individual athletes) than the LA84 Foundation.
While they are classified as a privately-run foundation, LA84 was founded with profits from the 1984 Olympic Games – public money. They operate solely on behalf of the elite members of Los Angeles’ ruling class as they pretend to be investing in youth sports. They use this faux-charity front of their foundation to help engage in the coordination and woke-washing of the Olympic Games.
When we talk about the real, tangible costs of the Olympic Games, it’s easy for the mayor to deflect by saying that money goes to youth sports, but in reality, the LA84 Foundation only disperses the bare 5% annual minimum necessary to retain their status as a tax-sheltered non-profit organization. But they don’t even spend that 5% on sports programs. Most of those funds go to salaries, offices, and who knows that else. Of their $151 million in total assets ($41 million in stocks, $24 million in bonds, and $73 million in other assets), they only spent $7.7 million (5.023% of their total assets) on qualified disbursements.
And when you break down that spending even further, the truth is even more egregious. From that $7.7 million, the LA84 Foundation only spent $1.27 million on direct charitable activities, which happened to include running a sports library, “marketing sports and sports awards programs,” and the LA84 Summit (which, last year, had the vomit-inducing theme of “Sports and Social Justice”). Of that small sliver of charitable spending, only $365,000 was actually spent on any youth sports programs (mostly swimming lessons). With over 2.3 million children under the age of 17 living in Los Angeles County, this means the LA84 Foundation only spent $0.16 per child on any actual youth sports activities. The foundation spends more money on insurance, computer maintenance, and their digital library than any youth sports.
How is this all tied to the Los Angeles plutocracy? When the LA84 Foundation checks on their tax form that they did not lobby for public policy at a local or state level, they’re neglecting to disclose the fact that the LA84 Foundation’s first president (who was paid handsomely for his work with the foundation) happens to be Casey Wasserman’s wife’s grandfather (an old buddy of Casey’s own grandfather Lew), and Wasserman happens to sit on the Los Angeles Organizing Committee for the 2028 Olympics. And, if you didn’t already see this one coming, Wasserman himself happens to be childhood besties with fellow Olympics booster Mayor Eric Garcetti, who lobbied heavily at both the state and federal level in support of bringing the Olympic Games to Los Angeles. But, of course, the LA84 Foundation and this tangled web of Los Angeles oligarchs and power brokers supposedly played no part in lobbying or influencing our “democratic processes.”
Despite fronting as a charitable organization, the LA84 Foundation fails to use the immense wealth at their disposal – money they received from the “financially-successful” 1984 Olympic Games – to actually accomplish their mission to address the tremendous inequality in access to sports and physical education in Los Angeles schools. Meanwhile, they’re busy making loads of money off of real estate investments with corporations like Blackstone, the largest single-family rental owner in Los Angeles, directly profiting from the foreclosure crisis, displacement, and rental extraction from the families and children they’re supposed to be helping. These conditions, perhaps not coincidentally, will only be exacerbated by the gentrification and displacement that’s inevitable from another Olympic Games in Los Angeles.
LA84 is many things: an unofficial PR agency to help the USOC and LA Organizing Committee sell the LA 2028 Olympics, a direct channel to funnel the proceeds of investments made with public money to the wealthy elites, and a real estate investment and extraction firm that profits from exploiting the most vulnerable renters in our city. But, hey, as far as our tax code is concerned, they’re just a youth sports charity…