The worsening financial position of the arts sector is catching up with Sydney's premier companies, with Opera Australia announcing it is placing its Alexandria warehouse on the market due to the pandemic-led shutdown of its 2020 season and multimillion-dollar box office write-downs.

PACT chair Caroline Wake said closure is an option if new funding sources cannot be secured.

"PACT has a newly renovated building and a restructured company," she said.

"Last December, we received funding from Create NSW to pilot a new structure in which five practicing mid-career artists were appointed to leadership roles to put them at the heart of all decision making.

"COVID-19 has obviously disrupted this but we have, nonetheless, continued to deliver. Now, eight months later, the decision to discontinue our multi-year funding places PACT’s future in jeopardy."

Founded in 1964, PACT nurtures young artists during their first years of development.

Coombs Marr was 18 years old and "fresh from the country" when she stumbled upon auditions in Erskineville for what she thought was an 'acting' course.

"What I found myself in was the PACT ensemble, which started me on a career path I’m still on today," she said.

"That course, along with all of its rolling around on the floor and some pretty terrible slow-motion performance exercises, somehow changed my life, gave me a network and a career. I actually can’t stress what an influence this training ground had on me, and so many of my peers."

Funding applications were considered by boards of Sydney arts leaders, ranked against published criteria and submitted for ministerial approval.

Applications exceeded available funding, which in 2020/2021 amounted to $10 million. Overall, Create NSW said applications received were of high quality, making the round "particularly competitive".

"The results saw 23 new companies receive multi-year funding, in particular an increase in clients in Western Sydney," it wrote to applicants.

"Most of the applications sufficiently met the assessment criteria but they were unable to be funded due to the limited resources available."

Sport for Jove's artistic director Damien Ryan said his disappointment spanned a greater period than the recent funding round.

The award-winning NSW-based repertory theatre company, which produces a major touring summer festival of outdoor Shakespeare and an interactive education program, had to cancel eight shows, including three tours in 2020.

"That is the same for every company, so we recognise it is difficult, but the recent funding rounds show a palpable lack of understanding of the place the independents have as an essential artery in the industry and in our culture. The effect will be felt in myriad ways if that artery is bled dry and not given some level of infusion at a time like this."

Theatre Network NSW coordinator Katrina Douglas said it had reached out to impacted organisations to offer support.

"Theatre in NSW has the potential to be a leading force in a post-COVID recovery. These organisations, as well as their audiences and communities, are key to achieving this potential."

The funding decision, Coombs Marr said, amounted to "cutting off the bottom rungs of the ladder to an entire industry".

"'It is taking away the first steps of career opportunity from working-class, diverse and rural young people," she said. "Disproportionately it is young people and especially disadvantaged young people who are affected by these cuts and we should be very alarmed by this."

PACT alumni and dancer Amrita Hepi was "alarmed and saddened that under gentrifying pressures within inner west Sydney, an institution like this may cease to exist".

Create NSW is encouraging unsuccessful organisations to apply for upcoming annual organisation and project funding and part of a $50 million emergency fund to support financially distressed arts companies.