New York Knicks proprietor James Dolan continues to take subject with the NBA’s income sharing insurance policies and transfer to streaming, which, in his thoughts, punish big-market groups by redistributing the cash they earn, largely by native media rights and sponsorships, to less-successful franchises at a disproportionate price whereas crippling regional sports activities networks’ viability transferring ahead.
In a letter to despatched 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 working funds for 2024-2025 and the election of a brand new BOG chair.”
Dolan first outlined his displeasure with the revenue-sharing construction again in July in one other letter to the board additionally obtained by ESPN, which framed Dolan’s critique as a “denunciation of a doable 8% league workplace minimize of the brand new $74.6 billion media deal and a nationwide tv and streaming package deal that renders the league’s regional sports activities networks as unviable.”
“The NBA has made the transfer to an NFL mannequin — deemphasizing and depowering the native market,” Dolan wrote within the letter, per ESPN. “Quickly, your solely income concern would be the sale of tickets and what shade subsequent yr’s jersey might be. Don’t fret, as a result of as a consequence of income pooling, you might be assured to be neither a hit nor a failure.
“After all, to get there, the league should take down the profitable franchises and redistribute to the much less profitable. This new media deal goes a protracted strategy to carrying out that purpose.”
From ESPN’s July article:
Dolan outlined his criticism of what he known as the league’s plan to retain “$6 billion (or 8 p.c) of the total-NBA associated charges” with out “enough justification … nor transparency into the way it arrived on the sum, how these charges might be allotted or to what extent the league will make the most of this purported income development to incur new and incremental prices and additional increase the league’s ever rising expense stage.”
Dolan made a comparability to the league retaining $15 million (0.5%) within the league’s present media deal for the 2024-25 season and expressed dissatisfaction with a rise of $358 million in 2025-26 beneath the league’s proposal, in accordance with the letter.
Dolan cited points with proposed income sharing within the league’s sponsorship and native tv packages too, in accordance with the letter. Based on Dolan, the league’s “proposal would even have a detrimental impression on the worth of every member workforce’s native sponsorships,” together with “the supply of camera-visible advantages at as few as 23 dwelling video games — roughly 20 p.c discount to what was traditionally offered.”
Additionally, Dolan wrote, “workforce sponsors/companions would not be protected” throughout nationwide broadcasts, which undercuts the premium that member workforce sponsors could be charged for being the only real third get together promoted in a selected sponsorship class.
“These modifications drastically improve the challenges related to attracting and renewing very important sponsorship income by creating a very unfriendly atmosphere for member workforce sponsors.”
“Member groups depend upon income obtained from native rights charges and on elevated fan engagement by prime quality broadcasts that present devoted and tailor-made protection for native audiences.
“But the proposal threatens to fully eradicate (Regional Sports activities Networks) with no comparable alternative provided by the league and no articulated plans to handle the manufacturing and distribution vacuum that the league will inevitably create in its quest to additional disrupt the RSN trade.”
Based on Dolan: “The elevated variety of unique and non-exclusive video games signifies that nationwide companions would have the power to air practically half of the common season and all postseason video games. This discount in out there video games for RSNs dangers rendering your entire RSN mannequin unviable.
In essence, Dolan is saying that there’s changing into much less and fewer worth for native sponsors to air the video games when viewers can simply head over to one of many league’s streaming companions (Amazon Prime, Peacock) for any video games not aired nationally. For individuals who solely have these native networks as a part of their package deal to look at video games, properly, what motive is there to maintain paying for the native community?
The proof is within the numbers. As reported by ESPN in July, “42 million houses have deserted conventional paid tv over an eight-year interval,” and people losses “embrace a forty five% decline for the Knicks’ MSG Community.”
This, in fact, isn’t an argument the widespread man goes to be significantly inclined to sympathize with (a multibillionaire crying over misplaced income), nevertheless it certainly does have benefit in the event you’re anybody with an curiosity within the sustainability of regional sports activities networks — though that ship has most likely already sailed.
At any price, the Board of Governors vote and assembly is about for Tuesday in New York, in accordance with ESPN. We’ll see whether or not Dolan’s critiques have sufficient assist to doubtlessly impact change.
