New York Knicks owner James Dolan wrote an open letter to the NBA, as reported by Adrian Wojnarowski , complaining about the NBA's revenue distribution model of their new $76 billion media rights deal. Dolan is seemingly unhappy about the NBA adopting what he considers to be 'an NFL model' of revenue distribution.
"The NBA has made the move to an NFL model -- deemphasizing and depowering the local market. 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.
Dolan added that the NBA is trying to lift the smaller teams and giving each franchise a similar share of revenue, despite the size and popularity of the franchises. He believes that this is an unfair approach to the bigger teams, and claims that the league and the media are trying to 'take down' the bigger franchises and lift up the smaller franchises.
"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 them to the less successful. This new media deal goes a long way to accomplishing that goal.”
In the letter, Dolan also claimed that the new television deal would cause problems for franchises and their sponsors, as certain sponsors would not be protected and highlighted in the way that the team and sponsor initially agreed upon. He added that this could jeopardize any current and future sponsors that teams have been able to secure.
Furthermore, the media rights deal's seeming move to streaming actually jeopardizes the franchises' ability to secure local media rights deals, which serve as a pretty large chunk of their revenue and financial planning. He called on the league to address this issue, as this model could hurt regional sports networks (RSNs) and thus, hurt teams in the NBA.
"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...."
"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."
Dolan Looking To Get More Of The Revenue For The Knicks
Dolan concluded the letter by stating he believes that there are other owners in the NBA who will agree with him but noted that the league will be dismissive about these concerns. He urged the NBA to remember owners like Jerry Buss who were instrumental in the league's success, and what they would have wanted.
“We trust that our concerns are shared by many of our counterparts across the league, each of whom will be similarly impacted. The league will say that it does not matter because your franchise value will continue to rise; that contemplates you will eventually sell....”
"Once again, pride of ownership is what is sacrificed. We are well on our way to becoming a one-size-fits-all, characterless organization. Just remember we did this on the backs of owners like Jerry Buss."
Dolan does share some valid concerns, especially when it comes to the regional sports networks and sponsors of teams. These deals are crucial for the financial success of many NBA teams. And jeopardizing those revenue streams would mean that the NBA should at least come up with a way to compensate teams for this.
However, it should also be remembered who James Dolan is. Dolan is complaining about how the size of the franchises should determine the share of the revenue. For Dolan, his feigning concern about the well-being of the league in the same breath that he demands that popular and valuable franchises be treated like a priority comes across as very hypocritical.
Dolan's Knicks are one of the most valuable franchises, and a big part of that is the exorbitant ticket prices he charges fans to enter Madison Square Garden for games. This letter reads much more like Dolan being upset that the Knicks aren't getting a bigger share of the pie, rather than being concerned about the financial well-being of all NBA franchises.
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