James Stewart on the Metropolitan Opera Negotiations

James Stewart, author of Den of Thieves and many other prize-winning investigative works, has turned his talent to exploring the recent contract negotiations at the Metropolitan Opera. In the March 25, 2015 issue of the New Yorker magazine, Stewart presents an amazingly detailed analysis of these negotiations and what led up to them. As one who has been chair of an orchestra negotiating committee, I was extremely impressed with his grasp of complex issues unique to our industry, and his ability to present situations in an honest, fair, and gripping manner.
Steward describes Peter Gelb, general manager of the Met, as a very accomplished manager, but with no previous opera nor non-profit experience, who was unable (or unwilling?) to keep spending under control. He sets the stage with Gelb giving a PowerPoint presentation to the Met orchestra negotiating committee, predicting bankruptcy in two to three years without 16% labor cuts, and the reaction of the committee, particularly that of Jessica Phillips, clarinetist and newly-elected chair of the committee.
An excerpt from an interview with Mr. Gelb:

“The challenges are huge,” he said. “I’ve always been aware that classical music and opera face an uphill struggle.” The core repertoire hasn’t changed much in generations, many operas last for hours, and they’re mostly sung in foreign languages. Even in English, audiences need supertitles to understand the words. Top ticket prices at the Met can run four hundred and seventy-five dollars. “The audience is much smaller than it was twenty or even ten years ago,” Gelb said. “We are attracting a younger audience, but they don’t buy subscriptions. I have to keep us economically sound. Every night, we have to fill thirty-eight hundred seats. We’re doing everything we can, but it’s tough.”

One of Gelb’s tactics was to present radically-updated versions of opera standards. In particular, a 2009 production of Tosca by Swiss director Luc Brondy replaced the beloved set by Franco Zeffirelli with a “dark, stripped-down set in a production that featured prostitutes and simulated sex acts onstage.” Needless to say, the new production caused great consternation among many Met board members and major donors
Stewart goes on to describe the 2010 Ring cycle, also controversial, that brought Robert Lepage of Cirque de Soleil to the Met, and resulted in huge cost overruns and mechanical failures of the set, not to mention derision from critics, including Alex Ross. Other productions resulted in physical injuries to performers because of the elaborate sets. Jessica Phillips commented that these new directors didn’t understand opera, and described how the sets need to work with the acoustics of a full orchestra and the vocal needs of operatic singers.
Stewart provides illuminating details about the management history of the Met, the members of the executive committee, the strategic planning committee formed in 2013, and the varying opinions about how to resolve the Met’s financial crisis.
Steward then turn his attention to the labor side of the negotiations.

“Labor strife is not new at the Met, though the last work stoppage was thirty-four years ago. In 1966, threats of a strike nearly derailed the opening of the Met’s new opera house at Lincoln Center. There were management-led lockouts in 1969 and again in 1980, leading to truncated seasons and a disastrous plunge in ticket revenue. But, for all the often contentious negotiations, the Met’s unionized employees had not agreed to a pay cut in decades.”

In previous negotiations, then manager Joseph Volpe had earned the union’s trust – he was the first general manager to have been a union member (as a master carpenter at the Met). Gelb replaced him as head of the negotiations in January, 2014, and demanded pay cuts from the union. The negotiating committee countered with an offer of a pay freeze, and thus the confrontation was set.
The musicians of the AFM were not alone. Stewart quotes from a letter sent to Gelb by Alan Gordan, executive director of the American Guild of Musical Artists, which represents the chorus, the principal singers, the dancers, and the production staff at the opera. Gordan wrote to Gelb:

“Actually, the cost reductions the Met needs to adopt are reductions in your run-away, unregulated spending and excessive draws on the endowment.” The failure of New York City Opera was the result of a “nonsense business plan imposed by the management” and “similar out of control spending.” The union would co-operate, Gordon wrote, only if Gelb accepted some measures of union oversight, “to control your astronomically increased spending” and “to reverse the waste, excess and extravagance that have thus far been the hallmark of your current administration.”

Stewart describes some of the findings of the negotiating committee, substantiating cost overruns in various operatic productions, such as the need to transport a field of poppies to storage after every performance, costume changes for the chorus that couldn’t really be seen clearly (one participant stated, “They changed from one set of gray rags into another set of gray rags”), etc. Finally, Gelb turned over box-office data, which Stewart summarizes in great detail.
Ultimately, the negotiating committee prepared a detailed report, with nine proposals for reducing costs by $31 million a year without cutting orchestra costs, and hand-delivered it to board members. The response was an “Open Letter to Opera Lovers” published in the New York Times on June 20, 2014 that ignored the musicians’ proposals and reiterated the need for drastic cuts.
Many on the board continued to be upset about the situation, especially long-time members. Management produced a rebuttal to the musicians’ presentation. The musicians went to the press and found support at the Mayor’s office. Stewart tells the story so much better than I can here; I won’t attempt to summarize his description of all the activities that ensued.
Finally, Eugene Keilin was brought in as an outside financial consultant, lots of meetings, lots of discussions, and finally a settlement at 6 AM on August 18^th. The orchestra agreed to pay cuts (3.5% immediately and 3.5% in 6 months) but gained oversight and unchanged work rules. Gelb agreed to management pay cuts, to reduce costs by $11.5 million, and to keep Keilin on as a financial overseer.
The new contract will not solve the Met’s financial problems. Stewart concludes his lengthy article with an analysis of the Met’s finances going into the current season (there was a $21 million deficit for FY15), problems with new productions, large draws on the endowment, and the launch of a $600 million fund-raising campaign.
Problems persist – the fund-raising efforts are not proceeding as well as hoped, some board members have resigned, filling the hall is always challenging… Stewart closes his brilliant article thusly:

Still, Gelb’s vision for the Met seems unshaken. When I asked him which of the budget cuts had caused him the most pain, he said it was having to reduce the number of new productions from seven to six. “Six is the minimum,” he said. “Other top companies are doing more, and Paris is doing ten. With new productions, you get on the front page of the culture section. Revivals get much less attention.”
Even so, the Met can’t sustain many more twenty-two-million-dollar annual operating deficits. Many of the people I interviewed worry that neither Gelb nor anyone on the board seems to have a backup plan. As one board director told me, “There is no Plan B.”
When I asked Morris [William C. Morris, chair of the executive committee] what the Met board would do if Gelb’s strategy doesn’t work over the next few years, he said, “We’re going to keep producing opera as long as we have the means. If those means decline, the quality will decline. And if the means aren’t there we will no longer be putting on opera.”