Knicks owner James Dolan thinks the NBA’s distribution model of revenue with the $76 billion media rights deal is unfair to the big and successful franchises.
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….”
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