Tensions rose exponentially on Wednesday in the negotiations between the Metropolitan Opera and its unions after the opera's general manager warned there could be a lock out if an agreement isn't reached when contracts expire on July 31.

The Met has proposed that unionized employees agree to changes in work rules and benefits to save the institution about 17% in annual costs to help erase the $2.8 million deficit. So far the talks have been futile. In a letter, General Manager Peter Gelb said that the Met can't continue on its current economic path so it must find cost reductions. He added if there is no agreement that they should "please plan for the likelihood of a work stoppage," although he hoped "to avoid such an unfortunate event."

The letter was accompanied by a memo telling employees that their Met-sponsored medical, dental and vision insurance would cease as of Aug. 1 if there is a work stoppage, but that they could purchase coverage through COBRA. It also offered the Department of Labor's phone number so they could check if they were eligible for unemployment benefits.

"Today’s communication to our staff was intended to insure that everyone who works at the Met is as prepared as possible for any outcome," the Met said in a statement. "The Met is dedicated to working together at the bargaining table to find reasonable compromises with the unions, and we are still hopeful that this can be achieved before the contract expiration date."

The unions have countered that it is Mr. Gelb's poor management and failed artistic vision, and not their compensation, that is causing the Met's financial problems. Attendance at the Lincoln Center opera house fell 17.5% in the five years ended in July 2013, while box-office receipts were down 4%, to $89.3 million, in the same period.

"If Peter Gelb thinks a lockout gives him 'leverage' in negotiations, he doesn't understand the performers who work for him," said Alan Gordon, executive director of the American Guild of Musical Artists, in a statement. "Someone who would hurt the very people who work for him by taking away their money and health insurance is a very disturbed individual, not a leader but a betrayer."

Local 802, American Federation of Musicians and the Metropolitan Opera Orchestra musicians agreed. In a statement it said, "That Peter Gelb would announce the prospect of a lockout before the start of negotiations with the musicians, choristers, stagehands and other segments of the workforce is indicative of his disrespect for his audience, his artists and the city of New York."

The union also said that at its initial negotiating session scheduled for this Friday, the musicians plan to propose ideas that would allow the Metropolitan Opera to realize over $20 million in cost-savings and avoid draconian cuts.

A spokesman for the Met didn't have an immediate comment.