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For almost 70 years, New York City has - had been home to two opera companies: the well-heeled Metropolitan Opera and its scrappy younger sibling, the New York City Opera.

But as Jeff Lunden reports, City Opera has fallen upon hard times. And a bitter labor dispute could mean curtains for this beloved institution.

JEFF LUNDEN, BYLINE: New York City Opera developed a reputation over the years, as a place where people could hear young American singers, like Beverly Sills, perform an adventurous repertoire. But like one of the heroines of "La Traviata" or "La Boheme," the company seems to be in desperate, possibly fatal, straits. Over the past decade, it's seen its endowment and audiences dwindle through a series of managerial and financial missteps.

According to Risa Heller, a spokesperson for City Opera, the company racked up crippling deficits.

RISA HELLER: And these deficits required dramatic changes to our company. So first, in May, we announced that we were leaving Lincoln Center to perform elsewhere around the city - which significantly decreases our operating costs. Second, we've eliminated more than 42 percent of our administrative staff; laying off many longtime employees. In restructuring, the company's collective-bargaining agreements reflect the financial reality of the opera going forward, as a major component of that plan.

LUNDEN: When George Steel was hired as artistic director two years ago, he put on two, truncated seasons at Lincoln Center, and City Opera's unions agreed to major concessions. But the unions are at loggerheads with management over plans to pay only for the times they rehearse and perform, rather than the currently guaranteed number of weeks of employment.

Alan S. Gordon is executive director of the American Guild of Musical Artists, the union which represents the company's singers, dancers and stage management.

ALAN S. GORDON: What we're really talking about is 26 weeks of employment under the old contract, or 22 weeks under the concession contract, versus what will now be 60 hours of employment.

LUNDEN: And that represents a de facto, 90 percent pay cut for the City Opera chorus.

GORDON: Someone who last year was making $40,000, this year would make about $4,500.

LUNDEN: But Risa Heller, of City Opera, says...

HELLER: For City Opera to survive, we have to transition to the more common model of paying competitive wages and benefits to our artists for only the work they rehearse and perform. We cannot afford to pay for work they don't do. This is the same model that's used at the Los Angeles Opera, the Houston Grand Opera, the Seattle Opera, and many others across the country.

LUNDEN: A federal mediator was brought in to help both sides negotiate a new contract. But talks broke down last Sunday evening, and City Opera imposed a lockout on the musicians who were scheduled to start rehearsals for "La Traviata" this week.

Anthony Tommasini, chief music critic for the New York Times, has been watching the dispute from the sidelines.

ANTHONY TOMMASINI: There are a lot of musicians and choristers for whom this was the bulk of their income. This was really the bedrock that they counted on. So I completely understand that this is a terrible outcome. But if the company is going to go on, it seems to me like what Steel and the board have sort of worked out for this season is the only way to go on - for now, anyway.

LUNDEN: With no further talks scheduled, Heller says City Opera is taking things one day at a time. But with the first performance scheduled for February 12th at the Brooklyn Academy of Music, time is running out.

For NPR News, I'm Jeff Lunden in New York.

(SOUNDBITE OF MUSIC "LA TRAVIATA, LIBIAMO, LIBIAMO"))

GREENE: This is MORNING EDITION from NPR News. I'm David Greene.

STEVE INSKEEP, HOST:

David, thanks for sitting in this week. Renee Montagne comes back with us next week. I'm Steve Inskeep.

(SOUNDBITE OF MUSIC "LA TRAVIATA, LIBIAMO, LIBIAMO"))

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