The new $74.6 billion media deal and a national television and streaming package that renders the league’s regional sports networks “unviable” were criticized by New York Knicks owner James Dolan, who has been critical of the NBA’s revenue-sharing policies. In a letter that was shared with the NBA’s board of governors and obtained on Monday, Dolan detailed a potential 8% league office cut and other issues.
The league’s revenue-sharing procedures, which funnel funds from high-earning major cities’ local media rights and sponsorship agreements to smaller-market clubs, have long been a point of contention for Dolan. Dolan voluntarily left the league’s media and advisory/finance committees in November, according to a letter he sent to the board of governors. He had already challenged Commissioner Adam Silver’s impartiality in an unconventional case he filed against the Toronto Raptors.
Dolan laid forth further concerns in Monday’s letter, which was based on a league proposal that was discussed with owners on the distribution of earnings in the recently agreed $74.6 billion TV agreement.
“The NBA has made the move to an NFL model — deemphasizing and depowering the local market,” Dolan stated in the letter. Soon, deciding on the color of next year’s shirt and selling tickets will be your only source of cash. The revenue pooling will ensure that you will not succeed or fail, so there’s no need to worry.
Obviously, the league has to disband the winning teams and give the money to the losing ones if they want to reach that point. That objective is significantly advanced by this new media contract.
Dolan laid out his objections to the league’s strategy to keep “$6 billion (or 8 percent) of the total-NBA related fees” lacking “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.”
In his letter, Dolan criticized the league’s proposed rise of $358 million for the 2025–26 season, using the league’s current media agreement in which it retains $15 million (0.5%) as an example.
In the letter, Dolan also mentioned his concerns about the league’s sponsorship and local television packages’ planned revenue sharing. Dolan says that the league’s “proposal would also hurt the value of each member team’s local sponsorships,” as well as “the delivery of camera-visible benefits at as few as 23 home games — roughly 20 percent reduction to what was historically provided.”
Dolan also said that “team sponsors/partners would no longer be protected” during national broadcasts, which reduces the premium that member team sponsors may demand being the only third party advertised in a certain 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 brought up the 42 million households who have cut ties with conventional pay TV over the last eight years, and how the league’s new streaming and TV arrangements have only made matters worse. This includes a 45 percent drop in viewership for the Knicks’ MSG Network. According to Dolan’s letter, the RSNs are no longer “viable” because of the league’s new national arrangement.
Earnings from local rights fees and more fan participation via high-quality broadcasts that cater to regional audiences are the lifeblood of the league’s member clubs.
“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.”
The opportunity for national partners to show roughly half of the regular season and all playoff games would be enhanced due to the increased amount of exclusive and non-exclusive games, according to Dolan. This decrease in RSN-compatible games threatens to derail the RSN paradigm as a whole.
All NBA markets may skip their RSN and watch specific games in their local market thanks to the proposal’s streaming partners (such as Amazon Prime Video and Peacock). Local safeguards for RSNs are not provided under the plan.
“We trust that our concerns are shared by many of our counterparts across the league, each of whom will be similarly impacted,” Dolan said in the letter’s last paragraph. Your franchise worth will keep to up, the league will tell you; that’s because they expect you to sell your team at some point.
“Once again, pride of ownership is lost. We’re on our way to becoming a one-size-fits-all, characterless corporation. Just remember, we accomplished this on the backs of owners like Jerry Buss.”
