New York City Opera Files for Bankruptcy

NEW YORK ( TheStreet) -- The U.S. government isn't the only thing shutting down. In a classic case of synchronicity, the New York City Opera is closing its doors permanently, lopping off its 2013-2014 season after only one production.

A report published by Bloomberg midnight Monday night said the NYCO was expected to file for bankruptcy Tuesday. The group had already given itself an end-of-September deadline for a dramatic fund-raising campaign that failed to come close to its short-term goal of $7 million.

TheStreet wrote last week that this move appeared inevitable and about the role the NYCO has filled over its 70-year period.

A white knight benefactor could have charged in to save the group. But billionaire, Bloomberg Philanthropies founder and New York City Mayor Michael Bloomberg, in remarks reported in the New York Times Monday, succinctly dashed those hopes by voicing what many had been thinking.

"The business model doesn't seem to be working," Bloomberg said.

As mayor, Bloomberg noted he had had to make cuts in grants to arts institutions in favor of other priorities, including education. Regarding the NYCO's need for private contributions, he said, "My foundation's made up for some of it, but we have lots of other things to do, too, and we can't just do it ourselves,'' he said. The New York Times article estimated that Bloomberg's foundation gives more than $500,000 and less than $1 million to the NYCO annually. The opera company itself told the New York Times that Bloomberg's foundation had helped them gather other contributions as well.

The NYCO had previously announced it needed $7 million to complete its 2013-2014 season and would need an additional $13 million dollars by the end of the year to program its next season.

In making a public plea for funds, the NYCO launched a Kickstarter campaign with the goal of raising $1 million in smaller donations in a 22-day drive. That drive fell short, raising only a little more than $300,000. As Bloomberg's remarks illustrate, that lack of grassroots support, together with longstanding budget woes and a shortage of major benefactors, has caused some to write off the group as a loss.

The NYCO was founded in 1943 by Mayor Fiorello La Guardia, who called it "the people's opera." The group has long had a mandate to present as wide as possible a vista onto the operatic literature, with world class performances highlighting American artists and at ticket prices anyone could reasonably afford.

In a video on the group's Kickstarter page, General Manager George Steel notes that each NYCO production costs $600 per seat, while each ticket sold to the public only costs $25. In order to keep the opera affordable, the difference has to be made up by charitable contributions.

Those contributions have not risen to keep pace with costs. Steel took radical measures to control costs, including leaving the group's more expensive home in Lincoln Center and thus also severing many of its union obligations. But those decisions seem to have cost the group substantial prestige and called its leadership into question, making it even harder to raise funds.

Steel had few good choices available to him and took the ones that at least prolonged the life of the company. The current state of charitable donations is itself unfavorable to cultural enterprise. Giving has not returned to pre-2008 levels (when adjusted for inflation) let alone kept pace with dramatic increases in costs not reflected by inflation alone. The high-net-worth individuals, who account for most charitable giving, are still guarding their wallets.

Many other major cities can support two or more major opera companies, notably Paris, Berlin, Munich, London and Los Angeles. From now on, the Metropolitan Opera will be New York's only surviving company.

Plácido Domingo, one of the most famous operatic tenors of our time and one third of the famed "Three Tenors" concert act along with the late Luciano Pavarotti and José Carreras, launched his career at NYCO in the mid-1960s. In a recent Associated Press report, Domingo said, "My early performances with New York City Opera were what really kicked off my international career, and I look back on those days with enormous pride. The company has done incredible work for so many decades, and it has played an essential role in New York's cultural scene for millions of opera lovers. It would be an absolute tragedy for that legacy to come to an end."

-- Written by Carlton Wilkinson in New York.

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