Musicians' Unions Take Battle with City Opera to Attorney General's Office

Monday, July 18, 2011

The unions representing performers at the struggling New York City Opera are taking their fight to the Attorney General's office.

In a letter, the unions -- the American Guild of Musical Artists, AFL-CIO and Local 802 -- ask the New York Attorney General to investigate whether the opera violated its endowment agreement, or committed other financial fraud. The unions are also seeking an injunction to halt the company's plans to move from its permanent home at the David H. Koch Theater.

“This latest salvo is another distraction from real issues," said City Opera spokesman Maggie McKeon in a statement. "We take strong exception to the suggestion that we have misled anyone, that accusation is ridiculous."

The letter to the State Attorney General maintained that the company violated terms of a gift provided by the Lila Acheson and DeWitt Wallace Fund for Lincoln Center, established by the founders of Reader's Digest in 1982. It contends that the fund came with a condition that the funds would be used for supporting City Opera while it remained as one of Lincoln Center’s constituent companies.

On separate occasions in 2008 and 2009, the Attorney General's office granted City Opera permission to draw upon it endowment to support its cash flow while the renovation of the Koch Theater was ongoing. The unions maintain that “the very premise of the Petition was that City Opera would be able to overcome its financial problems and thus restore the funds to the Wallace Fund because the [court order] would ‘reposition City Opera in a newly renovated home with a refocused artistic mission.’"

City Opera is facing dire financial problems, including a $5 million deficit this season and an endowment that has dwindled to $4.8 million, from $55 million. The company drew nearly $25 million from the Wallace Fund in 2008 and 2009. During that time, it also intended to remain at Lincoln Center.

Last week, it presented a plan for a touring company that would perform at the Brooklyn Academy of Music, El Museo Del Barrio and the the Gerald W. Lynch Theater at John Jay College.

The attorney general's office was not immediately available for comment.

A call to the Wallace Fund was also not immediately returned. At its peak in the early 1990s, the fund was one the nation's biggest private donors to arts and cultural groups. As of October 2008, it represented approximately 80 percent of City Opera’s endowment. About $2.9 million of the current endowment is Wallace money.

Additional reporting by Annmarie Fertoli

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Comments [3]

Michael Meltzer

In the business world, a major plan would be footnoted with a back-up plan ("Plan B"), ready-to-go if the major thrust is in progress but looks like it's going to fail.
The absence of an alternate plan would be considered so amateurish in business, it would be an insult to discuss it. The apparent absence of such a plan in this case makes David's caveat an omenous one. Is failure in the planning?
One would like to hear, publicly, the words from Mr. Steel, "Failure is unacceptable."

Jul. 19 2011 09:44 AM
David from Flushing

Liquidation is becoming more and more of a possibility for City Opera.

Jul. 19 2011 07:00 AM
John J. Christiano from Franklin NJ

Two people arguing about which exit to use while the building burns around them.

Jul. 18 2011 09:25 PM

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