James Dolan, the owner of the Knicks and Rangers, signed new contracts last month to remain in his roles leading MSG Sports and MSG Entertainment. While his control of both companies was never in doubt, the deals do lay out new compensation packages for Dolan, which have been a legal bugaboo for him in the past.
Dolan will remain the executive chairman of MSG Sports, the company which houses all of Madison Square Garden’s sports teams and holdings, and the executive chairman and CEO of MSG Entertainment, which owns the arena and MSG’s live entertainment business. He will be paid a minimum of $26.5 million annually for his roles with the two companies, based on a combination of base salaries and equity grants, with the possibility to earn annual bonuses targeted to be worth no less than 200 percent of those base salaries.
As MSG Sports executive chairman, Dolan will receive a base salary not less than $1.25 million. As MSG Entertainment CEO and executive chairman, Dolan will receive a base salary no less than $2 million. The compensation committees for both companies will review his salary each year to make sure that he is “paid consistently with the market for other similarly situated executives as well as external peers.”
Both agreements were signed on Dec. 27 but written to take effect months earlier in 2021 after the expiration of his previous employment contracts. They were revealed in SEC filings late last month, as is customary of publicly traded companies.
The Dolan family retains significant control over MSG Sports and MSG Entertainment, both as shareholders and with its power on the boards of directors. The Dolan family holds nine of 17 board seats at MSG Entertainment and eight of 17 board seats at MSG Sports. Former Knicks team president Steve Mills holds a seat on the MSG Sports board, while Isiah Thomas, the former Knicks president and NBA Hall of Famer, holds a seat on the board for MSG Entertainment.
Dolan’s pay has been an issue in the past. An MSG Sports shareholder sued the company and Dolan for excessive compensation in 2019 after he took in more than $75 million over a three-year period from 2016- to 2018, which the suit said was out of line with other executives in his position.
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The two sides reached a settlement in 2020 where MSG did not admit any fault but Dolan gave back more than $30 million in stock awards. This followed an internal investigation that led to that decision. MSG Sports also declared that Dolan would not be allowed to be recompensed for what he lost.
The Dolan family controls MSG Sports — the company that owns the Knicks and Rangers, along with an AHL team and MSG’s gaming franchise — but Dolan is not only the leader of the entity, he also maintains final say on any transaction that would change who controls the company, and therefore the two professional sports teams. The voting rights of the Dolan Family Committee ensure it.
The committee is made up of five members of the Dolan family and “approval of a change in control transaction must be approved by not less than all but one vote,” according to an SEC filing made by MSG Sports last year. Each member of that committee gets one vote, except James Dolan, who gets two, which allows him to block any sale that would change who runs the company.
Dolan has run Madison Square Garden and its teams since 1999. MSG completed a spin-off into two companies in April 2020, splitting up the two franchises from the arena itself.
(Photo of James Dolan: Andrew D. Bernstein/NBAE via Getty Images)
