The Metropolitan Opera, which has been cutting costs in recent years to address its serious fiscal challenges, got a measure of good news on Wednesday when Standard & Poor’s affirmed the company’s “A” credit rating and revised its outlook to stable from negative.
The ratings agency cited the Met’s ability to record a $1.1 million surplus in 2015, after running an alarming $22 million deficit the prior year. “Supporting the rating is our opinion of management’s ongoing efforts to control costs and enhance revenue and fundraising, with a goal to record at least break-even operating results in fiscal 2016 and beyond,” it wrote in a report.
But it noted that the Met faces serious challenges, including an underfunded pension plan, dependence on large contributions each year to break even, and an endowment fund that, valued at $266 million last July 31, the agency considers “low for an organization of its scope.” (The company’s budget is around $300 million a year.)
In recent years the Met has cut spending — winning concessions from its unions after bitter negotiations in 2014 — and it is now working to raise more money. Peter Gelb, its general manager, said earlier this season that the company is in a five-year, $600 million fundraising drive aimed at doubling its endowment and supporting operations and capital projects.
Standard & Poor’s said it expected the Met to reduce the balance on its operating line of credit. The Met had $115 million in total debt outstanding as of last July 31, the agency reported — $98 million in bonds it sold, and $17 million drawn on its line of credit.
Another ratings agency, Moody’s Investors Service, left the Met’s credit rating unchanged last month at Baa1 with a negative outlook. Moody’s noted that the Met was seeing “some softness in box office revenue” this year compared to what it had budgeted, but continuing to benefit from “uncommonly high donor support.”
Standard & Poor’s noted that the Met was reporting an 86 percent ticket subscription renewal rate, which the agency deemed high, and singled out its popular simulcasts of opera to cinemas. “In addition to in-house performances on the main stage,’’ it wrote, “performances are viewable across a wide variety of media; this is a positive credit factor, in our view, because it helps broaden viewership for an art form whose core audience has been aging for several years.”