Backstage Drama Unfolds at the Royal Opera House : Music: Director Jeremy Isaacs faces a critical report of his management as well as a board that may not renew his contract.

After serving with distinction as chief executive of Independent Television’s high-brow Channel 4, Jeremy Isaacs had hoped to become director general of the British Broadcasting Corp. But he was passed over for that job, possibly because he had spent most of his career with a BBC rival.

Instead, he received a glittering consolation post: He was tapped to head the Royal Opera House, at Covent Garden.

But now, after four controversial years at the helm, Isaacs, returning from a European music-festival vacation, will confront a highly critical report of his management and an opera-house board that may not renew his contract. The pugnacious director is also locked in a quiet but bitter struggle with David Mellor, who, as the new minister for national heritage (the so-called minister of fun), supervises government subsidies of the arts.

Isaacs--according to leaks of a study by an independent commission, appointed by the Arts Council and headed by Baroness Warnock, a respected senior academic--has run the opera house “with incredible amateurism and all the precision of a choir school.”

The report, scheduled for release this month, indicates that there is little delegation from the top and poor communication among staff--with management meetings consisting of chance meetings in corridors. Isaacs also comes under fire for being too ambitious with too many productions and careless about costs.

Further, the report suggests that the opera house’s general director should not be an artistic impresario, as Isaacs has sought to be, but a hard-nosed, businesslike chief executive.

That observation underscores one of the major issues for Isaacs, who few observers question has made his share of mistakes. In his defense, supporters note that he assumed control over an institution that includes the Royal Opera, the Royal Ballet, and the Birmingham Royal Ballet; each has its own artistic director.

Still, Isaacs clearly has made enemies with his abrupt, abrasive style, which many call arrogant. The musicians and dancers already have struck the opera house, and another costly job-action has been threatened for this fall. Isaacs has had his rows with other temperamental artists.

And he enraged many with his public announcement that the Royal Opera would run at a deliberate loss. In a statement that caused the Conservative government to fume, Isaacs said he was “not prepared to preside over further cuts in production or musical standards.”

This position, he thought, would force the government to increase the subsidy for the Royal Opera. But such tactics--which might have worked with a Labor government, which the trendy-liberal Isaacs was said to favor--backfired with Conservatives, who have always looked unfavorably on spending large sums of money on the arts.

Indeed, it is a pragmatic fiscal concern--the soaring cost of opera tickets, up a staggering 140%--that has been one of the singular items that has made Isaacs so unpopular. The average ticket price last year, including restricted-vision seats, was $100; the cheapest unobstructed seat, in an area referred to by wags here as being “up in the gods,” hit $60. Those prices, however, are comparable to those of major international opera houses.

Ticket costs led Mellor to complain publicly, in a jab at Isaacs, that he would “feel a great deal more comfortable listening to great art in the company of a good cross-section of the British people, rather than just a few who can pay outrageous prices in order to experience it.”

“Art,” Mellor added, “is not going to flourish if it becomes ghetto-ized among the super-rich.”

His latest criticism was part of the bad blood between the so-called minister of fun and Isaacs, who will be 60 next month. At a special gala two years ago, Mellor, then Minister of Arts, publicly chastised Isaacs; that happened after Mellor’s wife had arrived at the function and was not properly welcomed nor shown to her seat.

That might seem a small slight to some. But Mellor, who fancies himself an opera lover, is not a good man to snub, as he plays key a role in deciding the amount of subsidy, authorized by the Arts Council, for the Royal Opera House and its constituent parts. Mellor has made it clear that he does not appreciate Isaacs’ constant complaints that the government does not support the opera house sufficiently.

The Arts Council subsidy, he and others note, ran to $37 million last year, with ticket sales and sponsorships making up the rest of the institution’s budget. Even still, the opera house’s debt is expected to reach about $8 million by year’s end. Before Isaacs took over the institution, its state subsidies were 53% of its budget; that sum has fallen to 38%, despite widespread suggestions that it be given more public funds.

Isaacs has long argued that the Royal Opera House should be subsidized at the same levels as its European counterparts. The famed Vienna, Paris and Milan operas all operate with generous government subsidies--and have lower ticket prices, particularly for cheaper seats.

The focus on government funding has become particularly acute for institutions like the opera house because of the recession. Corporate sponsorships of individual operas have fallen and none of the productions in the fall season have found a business sponsor. Further, business sponsors prefer operatic war horses, such as “Tosca” and “La Boheme,” while those who run the opera house believe they must continue to press more innovative fare.

The Royal Opera House’s situation is particularly acute as the Covent Garden house needs extensive modernization, estimated to cost as much as $400 million; that work, of course, has been postponed.

Given the state of the house and its finances, some bankers even warn of possible future bankruptcy for the opera house.

Even as the financial and political clouds grow, though, Isaac has won approval for his performance as an impresario. The opera house’s new productions of Mozart’s “Mitridate” and Britten’s “Death in Venice” were favorably received. (There also have been controversial productions of “Il viaggio a Reims” and “Les Huguenots.”)

What lies ahead for the opera house? There are suggestions its financial problems may be alleviated, if its supporters can persuade the government to give it a share of money generated by the National Lottery, due to arrive in 1994.

Meantime, the current opera season will begin with Zubin Mehta conducting “Tosca,” with tenor Luciano Pavarotti. For this production, top tickets in the grand tier will go for almost $500, although there also will be a one-night, live-relay set-up that will allow 6,000 fans to see the production outdoors for free. Also planned for this season is Georg Solti conducting “Otello,” with Placido Domingo and Kiri Te Kanawa.