New York’s Metropolitan Opera on Review for DowngradeMichelle Kaske
New York City’s Metropolitan Opera Association, the largest performing arts organization in the U.S., is under review for a downgrade by Moody’s Investors Service, which cited reduced revenue.
Moody’s, which rates the Met’s $100 million of debt A3, seventh-highest, said the review “reflects softening in earned and gift revenue,” according to a report by analyst Dennis Gephardt.
“Management at the Met has disclosed that operating performance weakened significantly in the fiscal year 2014 on the heels of a $2.8 million deficit in FY 2013,” Gephardt said today in the report.
The Met, which had its first performance in 1883, opened its season last week with James Levine, the company’s music director, conducting a new production of Mozart’s “Le Nozze di Figaro” after lengthy negotiations with its unionized stagehands. Moody’s said new contracts would bring $22 million in annual savings, helping the company balance its budget.
Moody’s may lower the rating by several steps if deficits continue to limit the Met’s liquidity, Gephardt said. The company will need to look to its board members and benefactors for increased contributions.
“The capacity and willingness of key donors including board members to increase gift flow will remain a key factor for the credit,” Gephardt said.
The Met employs about 3,400 workers, according to its website.
“Recent changes at the Met -- including the implementation of our historic new union agreements, and a program of institution-wide cost cuts and controls -- will significantly strengthen the long-term financial prospects of the institution,” Sam Neuman, a spokesman for the Met, said by e-mail.
The rating company will complete its review within 90 days.