Knicks owner James Dolan rips NBA for revenue sharing, new broadcast rights deal

In a letter to the NBA's board of governors, New York Knicks owner James Dolan ripped the league and its new broadcast rights deal, accused the league of trying to disrupt the business model of regional sports networks (RSNs) and stated that, because of the league's revenue-sharing policies, it "has made the move to an NFL model -- deemphasizing and depowering the local market."

ESPN's Adrian Wojnarowski obtained the letter and published excerpts on Monday. The new broadcast rights deal is expected to bring in $76 billion over 11 years, according to The Associated Press. Dolan wrote that the league plans to retain 8% of that money without "sufficient justification ... nor transparency into how it arrived at the sum, how these fees will be allocated or to what extent the league will utilize this purported revenue growth to incur new and incremental costs and further expand the league's ever growing expense level," per ESPN.

As the chairman and CEO of MSG Entertainment, Dolan owns the MSG Network, an RSN. He wrote that the NBA is effectively killing RSNs. From ESPN:

"Member teams depend on revenue received from local rights fees and on increased fan engagement through high quality broadcasts that provide dedicated and tailored coverage for local audiences.

"Yet the proposal threatens to completely eliminate (Regional Sports Networks) without a comparable replacement offered by the league and no articulated plans to address the production and distribution vacuum that the league will inevitably create in its quest to further disrupt the RSN industry."

According to Dolan: "The increased number of exclusive and non-exclusive games means that national partners would have the ability to air nearly half of the regular season and all postseason games. This reduction in available games for RSNs risks rendering the entire RSN model unviable.

"The inclusion of streaming partners in the proposal (e.g., Amazon Prime Video, Peacock) allows fans in all NBA markets to bypass their RSN to watch certain games in their local market. The proposal offers no local protections for RSNs."

Last year, in an appearance on the Marchand and Ourand Sports Media Podcast, NBA commissioner Adam Silver said that the league needed to "reimagine these relationships" with RSNs, as there has been a "dramatic" fall in the number of young fans watching traditional television.

Last November, Dolan resigned from his positions on the NBA's media and advisory/finance committees in a letter sent to Silver (on which the other 29 owners were CCed). At the same time, he announced that he would no longer attend BOG meetings. This followed his decision to sue the Toronto Raptors for allegedly stealing confidential files; in a court filing in that case, the Knicks argued that Silver should not arbitrate the dispute in part because Maple Leaf Sports & Entertainment chairman Larry Tanenbaum is a "close ally" of Silver's. (In late June, the United States District Court for the Southern District of New York ruled that the case should be arbitrated by Silver and that "the attack on the fitness of Commissioner Silver to arbitrate this dispute is premature.")

In his most recent letter, Dolan, who owns a team that plays in the United States' biggest market, criticized the league's revenue-sharing model. 

"Soon, your only revenue concern will be the sale of tickets and what color next year's jersey will be," he wrote, per ESPN. "Don't worry, because due to revenue pooling, you are guaranteed to be neither a success nor a failure.

"Of course, to get there, the league must take down the successful franchises and redistribute to the less successful. This new media deal goes a long way to accomplishing that goal."

Dolan also complained that the NBA was damaging local sponsorships, per ESPN:

Dolan cited issues with proposed revenue sharing in the league's sponsorship and local television packages too, according to the letter. According to Dolan, the league's "proposal would also have a negative impact on the value of each member team's local sponsorships," including "the delivery of camera-visible benefits at as few as 23 home games -- roughly 20 percent reduction to what was historically provided."

Also, Dolan wrote, "team sponsors/partners would no longer be protected" during national broadcasts, which undercuts the premium that member team sponsors can be charged for being the sole third party promoted in a specific sponsorship category.

"These changes drastically increase the challenges associated with attracting and renewing vital sponsorship revenue by creating a particularly unfriendly environment for member team sponsors."

Dolan wrote that the NBA "will say that it does not matter because your franchise value will continue to rise" and lamented that "pride of ownership is what is sacrificed" and "we are well on our way to becoming a one-size-fits-all, characterless organization." He then invoked the name of the late owner of the Los Angeles Lakers: "Just remember we did this on the backs of owners like Jerry Buss." 

In 2010, however, when then-commissioner David Stern made it clear that the league would push for increased revenue sharing, Buss supported it.