Met Opera credit rating downgraded despite labor deal

Moody's has downgraded the credit rating of New York's Metropolitan Opera, voicing concern over its to improve its financial profile (AFP Photo/Bryan Thomas) (Getty/AFP/File)

New York (AFP) - Moody's on Monday downgraded the credit rating of New York's Metropolitan Opera, voicing concern over the ability of North America's largest classical music company to improve its financial profile.

The Met, considered among the world's most prestigious opera houses, in August reached an agreement with labor unions to cut pay and benefits over a four-year period.

But Moody's Investors Service said that the Met had only enough readily available cash at the end of the last fiscal year -- $46 million -- to meet 53 days of expenses and faced risks as half of its revenue comes from gifts.

The ratings service also pointed to the Met's need to put up two murals by Marc Chagall as collateral for bank financing. Moody's downgraded the Met's bonds from A3 to Baa1, with a negative outlook.

"While the Met has developed a five-year plan to improve liquidity and move to operating equilibrium, that plan remains unproven and dependent on donor support for annual operations as well as endowment," Moody's said in a statement.

"It also requires measured box office revenue growth and heightened expense management," it said.

But the agency credited the Met's effort to live-stream performances at cinemas around the world, saying the program improved the company's brand.

Moody's also said that the opera enjoyed unusually strong support from donors with an average of $152 million in gifts annually in the three years to July 31, 2013.

Classical music organizations in the United States were hit especially hard by the economic crisis in 2008, with many groups still struggling to preserve the support needed to pay expenses.

The New York City Opera, which for 70 years had served as a foil to the Met by showcasing more populist productions and up-and-coming performers, went bankrupt last year.