The unions for the company's singers, chorus and ballet dancers responded by saying it may strike, and it asked individuals and corporations to boycott purchasing tickets and withhold donations to the financially troubled company.
General Manager George Steel said the City Opera planned to present a season "one way or another" - an indication it may try to continue without unionized musicians. He said City Opera wanted to "make music with the artists who are eager to work with us."
Alan Gordon, national executive director of the American Guild of Musical Artists, said the AFL-CIO likely will "instruct its members to deal with City Opera as a union-buster."
"We would tell our members they can't work," he said during a telephone interview. "Maybe George will sing?"
The unions represent about 45-70 musicians, up to 40 chorus members and roughly a dozen directors and stage managers plus the principal singers brought in for productions.
The unions filed an unfair labor practice charge with the National Labor Relations Board in May, one week after the company announced it was leaving Lincoln Center for the Performing Arts, its home since 1966. The NLRB has not ruled on the charge, which alleged management illegally decided on the move without bargaining. The unions say they will file a second charge over the new work rules.
"We view this as an unlawful impasse," said Tino Gagliardi, president of local 802 of the American Federation of Musicians, which represents the orchestra. "We were willing to continue to talk last night, but they walked out. I think that movement was being made on both sides."
City Opera, which claims deficits of $44 million over a decade, announced in July a schedule of four operas at three venues from February to May next year.
Once negotiations began in June, City Opera asked the union to switch from guaranteed salary for about 26-29 weeks a season to a pay-by-performance contract that included the elimination of year-round health insurance.
There was just one bargaining session per month in the summer, and management set an Oct. 31 deadline that the sides agreed to extend through November along with health coverage.
Local 802 claimed income for musicians and singers would be reduced from $40,000 to $4,000 annually, and Steel's salary and benefits of about $400,000 would be higher than the pay of the entire orchestra.
Steel was just given a new contract through January 2015 and his salary is $324,000, according to opera spokeswoman Risa Heller.
"They seem hell-bent on wreaking havoc, not on finding a way forward," Heller said. "Though we have made our final economic offers, we are prepared to get back to the table when the unions are willing to discuss our proposals."
According to the implemented terms, obtained by The Associated Press, there would be no salary increase this season, a 1 percent raise in 2012-13 and a 2 percent hike the following season.
In a letter to contributors, Gordon said a strike against all performances was likely, and he urged the public not to buy tickets.
"You need to be aware that every dollar that you contribute to City Opera is being wasted," Gordon wrote. He said "it would be a travesty to allow the itinerant, small scale opera company" to perform "in bizarre venues with volunteer and student singers."
Chuck Wall, who became the company's chairman last December, said "the board is 100 percent committed to continuing the work of City Opera and we look forward to continuing to work with our contributors."
Founded as "the people's opera" by Mayor Fiorello LaGuardia in 1944, City Opera spent decades across Lincoln Center Plaza overshadowed by the Metropolitan Opera. Still, it helped build the careers of Beverly Sills, Placido Domingo and Renee Fleming, and it typically presented 12-16 operas with a peak of about 130 performances in a season.
The company announced in February 2007 that Gerard Mortier would become general manager for the 2009-10 season, but he backed out in November 2008 after complaining he wasn't given a sufficient budget. The company missed the 2008-9 season at Lincoln Center because of the reconstruction of its theater, then presented an abbreviated schedule of five operas and 33 performances last season.
Since the spring, City Opera has eliminated 42 percent of its administrative staff.
"We hope the unions can put aside rancor and political theater and find a way to move forward," Steel said. "We did everything we could to attempt to meet the needs of the unions but we simply do not have the money to pay for the guaranteed salaries or the full year of health insurance for everyone."
City Opera's schedule includes performances at the Brooklyn Academy of Music (Verdi's "La Traviata" from Feb. 12-18 and Rufus Wainwright's "Prima Donna" from Feb. 19-25), John Jay College of Criminal Justice (Mozart's "Cosi fan tutte" from March 18-24) and El Museo del Barrio (Telemann's "Orpheus" from May 12-20).
Gordon said the imposed work rules do not contain severance pay, unlike management's proposal prior to implementation. City Opera maintained it was making a dual-track proposal and that after Nov. 30 management would basically revert to its Oct. 14 offer, which did not include severance.