Knicks' James Dolan won't support NBA's 2024-25 operating budget, per report

New York Knicks owner James Dolan continues to take issue with the NBA's revenue sharing policies and move to streaming, which, in his mind, punish big-market teams by redistributing the money they earn, in large part through local media rights and sponsorships, to less-successful franchises at a disproportionate rate while crippling regional sports networks' viability moving forward. 

In a letter to sent the league's Board of Governors on Monday, Dolan, obtained by ESPN's Adrian Wojnarowksi, expressed his intention to "vote no on the league's proposed operating budget for 2024-2025 and the election of a new BOG chair." 

Dolan first outlined his displeasure with the revenue-sharing structure back in July in another letter to the board also obtained by ESPN, which framed Dolan's critique as a "denunciation of a possible 8% league office cut of the new $74.6 billion media deal and a national television and streaming package that renders the league's regional sports networks as unviable." 

"The NBA has made the move to an NFL model -- deemphasizing and depowering the local market," Dolan wrote in the letter, per ESPN. "Soon, your only revenue concern will be the sale of tickets and what color next year's jersey will be. 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."

From ESPN's July article:

Dolan outlined his criticism of what he called the league's plan to retain "$6 billion (or 8 percent) of the total-NBA related fees" 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."

Dolan made a comparison to the league retaining $15 million (0.5%) in the league's current media deal for the 2024-25 season and expressed dissatisfaction with an increase of $358 million in 2025-26 under the league's proposal, according to the letter.

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."

"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.

In essence, Dolan is saying that there is becoming less and less value for local sponsors to air the games when viewers can just head over to one of the league's streaming partners (Amazon Prime, Peacock) for any games not aired nationally. For people who only have these local networks as part of their package to watch games, well, what reason is there to keep paying for the local network?

The proof is in the numbers. As reported by ESPN in July, "42 million homes have abandoned traditional paid television over an eight-year period," and those losses "include a 45% decline for the Knicks' MSG Network." 

This, of course, is not an argument the common man is going to be particularly inclined to sympathize with (a multibillionaire crying over lost revenue), but it surely does have merit if you're anyone with an interest in the sustainability of regional sports networks -- although that ship has probably already sailed. 

At any rate, the Board of Governors vote and meeting is set for Tuesday in New York, according to ESPN. We'll see whether Dolan's critiques have enough support to potentially effect change.