Metropolitan Opera Association's rating sinks lower in junk territory

Lincoln Center, home of the Metropolitan Opera, which was downgraded by Moody’s.

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The Metropolitan Opera Association once again has been downgraded by Moody’s Ratings — this time to B3 — and its outlook was revised to negative from stable.

As of July 30, 2024, total debt outstanding was $183 million, Moody’s said.

Moody’s first lowered the opera house’s rating to B1 in March. This downgrade, analyst Debra Roane said, was prompted by projections that its fiscal 2025 financial reports could show even bigger operating gaps than 2024.

A Moody’s report said the rating “reflects persistent and increasing deterioration in the operating performance with large structural imbalances expected to endure over the next several years.”

The Met has drawn on its reserves repeatedly over the past three years to plug budget gaps, the report said. It’s now left with low liquidity and full reliance on a bank line.

The report noted the opera’s “renowned global brand and considerable scope for a cultural nonprofit,” which have drawn in “exceptionally strong donor support for operations.” However, its influence and donor support are difficult to maintain, Roane said.

“The Met is a pretty expensive product,” Roane said. “The sets, the salaries. And all of that has to be at a certain quality to attract attendees and donors.”

The opera house’s financial struggles date back to the pandemic, Roane said. Its attendance has recovered, but it’s still shy of pre-pandemic levels, and it has far fewer productions on its schedule.

The Met saw around $300 million of operating revenue in fiscal 2024, according to the report, and its reserves for fiscal 2025 are estimated at about $260 million.

The Met has been trying to draw in new, younger audience members as its most reliable patrons’ age, Roane said. It’s had some success in this, but the younger patrons are not attending productions as regularly.

“The changing consumer preferences [and] demographic changes are facing a number of cultural institutions,” Roane said. “But here, I would say, the budget gap is larger and the liquidity is lower, so we do see a greater risk at the Met compared to other peers.”

The Met’s management is searching for new streams of revenue, Roane said. But it’s also about to enter labor negotiations, which could create more pressure on its finances.