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Met Borrows Against Lobby Chagalls

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In a move described by a Metropolitan Opera board member as “a decision of last resort,” the company has collateralized the giant Chagalls in its lobby. Titled The Triumph of Music and The Sources of Music, they were commissioned for Lincoln Center when it was new. Now they’re sources of cash. General manager Peter Gelb, already forced to scale back his 2009–10 season, first disclosed the intention to collateralize the paintings so as “to deal with a cash-flow situation” n January, according to a source at the meeting. Met spokesman Peter Clark confirmed the news, saying that “the Met has had a long-term loan for a number of years which relied on cash holdings as collateral. The Chagalls are now being used as partial replacement collateral in order to free up some of the use of the cash.” (A source says the Chagalls were appraised at $20 million.) “If you have some great art sitting on the wall, why not use it as collateral?,” noted former Met CFO Marvin Suchoff. “It beats selling it for cash.” Earlier this year, the Times reported that next season’s deficit could amount to $40 million and that its endowment, previously over $300 million, had shrunk by a third. Still, the move to mortgage the Chagalls has stunned people close to the Met. It indicates “a greater cash-management problem than ever expected,” says a former member of the management. Were the Met to default on its loan, there wouldn’t be many other places suitable for display: They’re 30 feet by 36 feet each.

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