James Dolan's letter to Board of Governors challenged NBA expense level: sources

NEW YORK — The NBA’s proposed operating budget has increased by nearly 8% year-over-year, and the league’s Board of Governors (BoG) were not adequately briefed on the candidates to replace Larry Tanenbaum as BoG chair ahead of Tuesday’s election, the New York Daily News has learned.

These concerns were highlighted in a letter Knicks owner James Dolan sent to the NBA’s Board of Governors on Monday, according to a source familiar with the contents. ESPN first reported the letter.

This is the second time this offseason that Dolan has criticized the NBA’s escalating expenses. He pointed out that several of the league’s initiatives — including the In-Season Tournament, the WNBA, the G-League and Basketball Africa League — remain unprofitable. According to a league source, Dolan’s letter specifically referenced the In-Season Tournament, noting that its costs far exceed its revenue, now entering its second year. These investments, while unprofitable, are part of the NBA’s broader strategy to grow the league’s influence and partnerships in the long term.

Dolan’s letter also raised concerns about the process of electing a new BoG chair. As of Monday evening, according to a league source, most of the 30 NBA team owners had not been provided with briefing materials or background information on the candidates, despite a vote scheduled for Tuesday.

This second letter also criticized the disparity in information shared with all 30 teams compared to what is shared with the league’s audit committee. Dolan contends that all teams should have access to the same financial data as the audit committee, particularly when being asked to approve a new budget, according to sources familiar with the letter.

While the new letter focuses on the operations of the league office and the Board of Governors, it can be viewed as a proxy battle in Dolan’s ongoing war against the NBA in the wake of its new $75 billion media rights deal. While the deal — secured with Disney (ABC/ESPN), NBC/Peacock, and Amazon Prime Video — has been heralded as a major win for the league’s growth, Dolan argues it has been detrimental to local teams, particularly their regional sports networks (RSNs).

RSNs have historically been a critical revenue stream for individual NBA teams. These networks negotiate with cable providers to broadcast local team games and generate significant viewership and income for the teams. However, with the shift towards national broadcast deals and streaming services, RSNs are experiencing substantial declines in viewership and revenue. Many fans are cutting the cord from traditional cable packages, turning instead to streaming options, which have limited availability for local NBA games. Dolan, whose MSG Network is one of the most well-known RSNs, has seen subscriber numbers plummet by 45% over the last eight years, The News reported in July. This decline is why Dolan views the media rights deal, which heavily favors national platforms, as a direct threat to the viability of RSNs.

This latest letter marks the second time this offseason that Dolan has criticized the league for a lack of financial transparency. In July, Dolan challenged the NBA’s decision to retain up to $6 billion—about 8% of the $75 billion media deal — for itself, without providing teams with sufficient justification or details on how the money would be allocated. Following the July letter on the issue, the league office sent detailed breakdowns to all 30 teams, the News reported.

As confirmed by The News, Dolan was the sole vote opposing the approval of the new media rights deal, as first reported by Sports Business Journal.

Despite his ongoing criticisms, Dolan remains the Knicks’ governor on the BoG, with Madison Square Garden Chief Operating Officer Jamaal Lesane attending meetings in his stead, the News confirmed on Monday.