Pay dispute threatens to lower the curtain on opera company

New York City Opera locks out musicians and scraps rehearsals a month ahead of new season

The future of one of New York's premier cultural organisations, the New York City Opera (NYCO), is looking as bleak as a Wagnerian plotline amid an escalating dispute that pitches its musical divas against the money men.

The NYCO, dubbed "the people's opera" in contrast to the élite Metropolitan Opera, has already been forced by mounting deficits to leave its prestigious uptown location.

The pay dispute has become so serious that the opera yesterday locked out union members and abandoned rehearsals for a new season scheduled to start next month.

Mediation talks broke down at the weekend, and the entire season is now in doubt – something unions warned could sound the "death knell" for the 68-year-old institution. With a reputation for nurturing young talent and a mission to offer cut-price opera for a mass audience, the NYCO has been at the heart of New York's cultural life for decades. It claims a hand in launching the careers of Jose Carreras and Placido Domingo, as well as promoting new writers and directors.

But it has struggled to maintain its niche while the Met has expanded its "music for the masses" programmes, including cheap tickets and simulcasting its productions to cinemas.

The NYCO artistic director George Steel wants to slash the pay of its stars to save money, telling them it will no longer offer salaries and guarantee half a year of pay, but instead pay them only for the productions in which they perform.

He is hoping to push the company in a more populist direction by putting on less traditional works that could include rock operas and by using bankable musicians such as the cellist Yo-Yo Ma.

Unions said the consequences would be a collapse in their members' incomes. Choristers, for example, could see their average pay tumble 90 per cent to about $4,000 (£2,600), according to the American Guild of Musical Artists.

The dispute could be "the death knell for one of New York's cultural treasures", Gail Kruvand, chairwoman of the orchestra union's negotiating committee and assistant principal bass player, told the Associated Press. "We're heartbroken, but we cannot save the company. We made a good-faith effort to say that, yes, we are willing to sacrifice for the sake of ensuring that the grand tradition of the City Opera lives on."

The NYCO's deficits have been mounting for a decade, with the economic downturn and a disappointing 2011 season under Mr Steel accelerating the decline. The company's most recent annual accounts showed revenues sliding 12 per cent from already depressed levels, even as costs went up.