Musicians not returned as Opera Australia pockets $46 million from property sale

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Musicians not returned as Opera Australia pockets $46 million from property sale

By Linda Morris

Opera Australia has sold its prop and wardrobe warehouse for $50 million to avoid going into administration.

The sale in December to the Trust Company Ltd, a division of Perpetual Superannuation, has prompted the musicians’ union to call for an immediate end to job losses. A quarter of the company’s playing staff were sacked last September just three months before the property settlement.

Crisis is not over for Opera Australia

Crisis is not over for Opera AustraliaCredit: Prudence Upton

The 1.27 hectare industrial space in Sydney’s Alexandria sold on December 17 for $50.6 million, according to data provided by the Department of Finance and Services. Less taxes, Opera Australia said it banked $46 million.

OA’s chief executive Rory Jeffes said no further redundancies were planned but despite the sale proceeds bolstering its cash reserves, the company was not out of crisis yet.

The company will announce in May a multi-million dollar operating loss for 2020. Mr Jeffes said the predicted losses for 2021 would be “equally as significant”.

“In 2022 and 2023 we have to get to a point where we are balancing the books for the long-term sustainability of being able to provide all the employment we do,” Mr Jeffes said.

“If [cash] continues to pour out of the organisation until it’s all gone, then we are on a fool’s errand imagining sustainability without ever achieving it.

“Until we can get the borders open and be really flying high again we need to make sure we are minimising the opportunities to lose money.”

The warehouse was purchased for $2.3 million in 1995 and Mr Jeffes said the sale was painful, given the efforts of previous administrations and directors to secure the building. “To have to sell it was of course disappointing but if we hadn’t have done that we would have run out of cash.”

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Mr Jeffes said Opera Australia had received minimal state assistance and no federal rescue money.

The sale

The saleCredit: SMH

The warehouse sale conducted in a booming market netted less than the $70 million that was achieved when businessmen David Gonski, Simon Mordant, and John Curtis sold the nearby Bunnings store the year before.

To the surprise of some in the commercial property market, the warehouse did not go to open tender or a public campaign to optimise the price.

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Mr Jeffes said: “We had a lot of interest from people and the due diligence was done in such a way that we were very confident that the offer we did ended up accepting was extremely attractive for Opera Australia.”

An agent who pitched for the sale and did not want to be named said the price paid was 20 per cent below what he thought could have been achieved in the marketplace. Such property was highly sought after, he said, with a potential buyer contacting him only this week.

Opera Australia will remain in the warehouse under a leaseback arrangement with the new owners for the “foreseeable future”, Mr Jeffes said. In the meantime, the company would begin a search for a new warehouse in western Sydney or outside Sydney.

The Media, Entertainment & Arts Alliance has called on the company to resist making further unilateral staffing cuts and to renew existing work agreements in light of the sale.

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“All of our claims are based on achieving security in work,” the union’s Paul Davies said. “We invite the company to discuss and negotiate terms recognising that artistic excellence and the secure employment of its artistic, technical, and administrative staff - of all OA employees - are two sides of the same coin.

“We look to protect and advance the interests of the company as a leader in our performing arts community and on behalf of its audience. Making an agreement with us is the best way of achieving this.”

An international search is currently underway to replace Mr Jeffes who is stepping down as CEO later this year. There is no suggestion that his decision is in any way related to the property deal.

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