Marvin Suchoff remembers his first live opera well. He should–it was only 18 months ago. Suchoff went to see The Barber of Seville just before he was scheduled to interview for the job of CFO of the Metropolitan Opera Company of New York–a job he would land and still holds today.
Words like "repertoire" now come easily to Suchoff, whose only vocal music experience was a couple of obligatory years singing in the temple choir near his upstate New York childhood home. What doesn't come easy for a CFO of a lavish and expensive artistic endeavor like the Met is solvency–especially since the 9/11 terrorist tragedies. The Met lives off income earned from ticket sales, which must account for 64% of its budget–$193.1 million in 2004. Revenue from ticket sales dropped off after those attacks crippled New York and has yet to recover. Before 9/11, the Met could count on selling at least 90% of its seats. Post 9/11, that floor is just 80%, and it shows no solid signs of improving, according to Suchoff. "We're learning to cut back and live on less, trying to weather the storm," he says.
FINANCIAL HAIRCUT
Recommended For You
Cutting expenses is harder for an opera company than it is for many corporations. The biggest expense by far–81% of the budget–goes for payroll and benefits. What the Met sells is talent and production quality. You can't cut that very much without damaging the product and undermining future revenue, Suchoff notes. "I've cut budgets at other corporations before, but with an opera company, there's only so much you can cut. We're heavily vested in our reputation and the quality of our product. We can't let that slide."
To help make ends meet, the Met relies on contributions, which funded 36.2% of the budget for the 2003-2004 season. It makes a little money on the sale of opera DVDs and hosting other performance groups like the American Ballet Theatre and the visiting Bolshoi Ballet helps. Endowment income also contributes, but less than Suchoff would like. He won't say how large the endowment is, but in fiscal 2004 income produced by the endowment covered just 9% of the Met's expenses.
Running the Met's finances involves a complex endowment structure (five buckets), but a relatively straightforward cash management scheme, reports Suchoff, who also serves as de facto treasurer for the opera company. "Nonprofits were slow to get into the alternative investment world–hedge funds, for example–but they have finally done so, the Met included, and it's helping us improve our portfolio yields," Suchoff says. But the Met uses an array of money managers–21, to be exact–for its endowment simply to diversify, not to cater to aggressive investment alternatives, he explains. While income from the endowment helps the Met cover operating expenses, any cash shortfall is covered by bank borrowing–a term loan and one liquidity facility–to avoid drawing down the endowment's principal, Suchoff explains.
Despite its middle market size and comparatively small finance department of 14, the Met's need for credit and adequate financial transparency to attract institutional and corporate donors has prompted it to place more emphasis on its internal controls. "While nonprofits are not subject to Sarbanes-Oxley compliance, we generally, and the Met specifically, make a real effort to follow those rules and adopt the approved procedures when possible," Suchoff says.
MOVING FROM OIL TO OPERA
Suchoff's early career hardly put him on course for being the Met's CFO. After a couple of years at a public accounting firm, he worked for a while as controller of an oil and gas company and then joined Caldor Corp., a discount retailer, where he worked eight and a half years as its director of store financial planning, primarily preparing budgets for the chain.
Then, his career took a decisive turn. Ready to run his own shop, he perused the help-wanted ads in The New York Times and responded to an anonymous listing by a "prestigious nonprofit" that was looking for a financial professional. It turned out to be the Whitney Museum. Suchoff got the job and spent six and a half years as the finance guy for the art museum. The move to the Met with its bigger budget in March 2004 was less surprising. Despite his special perk of season tickets, Suchoff admits that he is not quite an opera aficionado yet, although he attends frequently. But while he may not appreciate all the subtleties of a great soprano, he knows one thing for sure–none of them come cheap.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
