James Dolan v. New York: As Backlash Mounts Over Lawyer Ban, MSG’s Chairman Remains Defiant

Madison Square Garden chairman James Dolan remains defiant in the face of an existential crisis at 4 Pennsylvania Plaza, where a lawsuit filed by two dozen ticket scalpers has mushroomed into a multi-pronged fight with some of New York state’s most powerful political forces — ostensibly at the worst time possible for the World’s Most Famous Arena.

Dolan is currently facing the revocation of Madison Square Garden’s alcohol license from the State Liquor Authority (SLA), a push by New York state Senate Democrats to revoke a $42 million tax break granted to the Garden four decades ago and an investigation by New York Attorney General Letitia James.

It all stems from a lawsuit filed against MSG in October, after more than two dozen longtime season ticket holders identified by Madison Square Garden as scalpers were told that their Knicks tickets were not being renewed for the 2023/2024 season. The brokers sued, arguing that team officials were booting them out of their seats just as the Knicks were finally getting good (the team is expected to make the NBA playoff this season).

Dolan responded to the lawsuit by barring the broker’s attorney, Larry Hutcher, and all lawyers from his firm, Davidoff Hutcher & Citron, from entering venues owned and operated by MSG. Soon, the policy was expanded to all law firms suing MSG, leading to a lawsuit from Hutcher and outrage from city and state officials.

The policy affects about 90 law firms and is being enforced using facial recognition software at all MSG properties, including Radio City Music Hall, where a mother chaperoning a Girl Scout troupe to see the annual Christmas Spectacular was pulled aside by security and forced to leave the venue after being identified as an attorney working at a firm with pending litigation against MSG. In that instance, the attorney was forced to wait outside while her daughter and friends attended the show.

The lawyer ban is unfolding just months ahead of a key hearing in July when MSG officials plan to ask city lawmakers to renew a special permit required for all 2,500-plus capacity venues to operate in the city — an ask complicated by a current disagreement over whether to relocate MSG’s namesake venue.

Madison Square Garden sits atop Penn Station, a long-in-decline rail station used by passengers coming in from Long Island and New Jersey. MSG bought the original Penn Station in 1960, demolished the above-ground structure and relocated the station below street level. Today, more than 600,000 passengers use the station each day. That’s led to calls from the Metropolitan Transit Authority (MTA) and state officials, including multiple past governors, to move Madison Square Garden and fix Penn Station. City and state leaders are facing increasing pressure to deny MSG’s request for a permanent permit — and Dolan’s ongoing antics aren’t helping.

In the state Senate, Democrats led by Sen. Brad Hoylman (D-Manhattan) have put Madison Square Garden’s $42 million property tax break on the chopping block over the facial recognition brouhaha. Hoylman wants any revenue created by stripping away the tax break sent to the MTA, an overtly symbolic gesture referencing the MTA’s battle with MSG over the future of Penn Station.

In response, MSG released a statement that read, “It’s interesting that Senator Hoylman is rallying to end governmental subsidies for corporations when just last year he voted in favor of legislation that extends a $420M governmental subsidy for the film industry and currently sponsors legislation to create new subsidies for the musical and theatrical production industry. Madison Square Garden is a significant job creator and an economic leader within both our community and the city. Our tax abatement is no different than the government subsidies that every single stadium and arena in New York City and state receive and in fact, is hundreds of millions of dollars less than most other venues.”

Next came a letter from an SLA investigator notifying MSG that it was considering revoking the liquor license of all MSG-owned and operated venues for violating a city rule that licensed establishments be “open to the public.”

“As a condition of your license your premises must remain open to the public, i.e., groups or individuals cannot be excluded on the basis of criteria that are not directly related to your duties under your SLA license, and that you must exercise a high degree of care and supervision to prevent any violations of the Alcoholic Beverage Control Law and the Rules and Regulations of the State Liquor Authority,” said the SLA in the letter.

Days later, the SLA demanded Dolan stand before the liquor authority and explain why MSG’s license should not be stripped away.

Dolan responded with a press release calling the SLA a “gangster-like governmental organization has finally run up against an entity that won’t cower in the face of their outrageous abuses.”

Dolan’s attorney, Randy Maestro, proceeded to file a Rule 78 petition against SLA — a measure used in New York State court to challenge a ruling or determination by a state agency. In a 47-page filing in New York Supreme Court, Dolan accused the SLA of a long history of corruption and even attacked one the SLA’s investigators, accusing him of racial bias and corruption while serving in the NYPD for 19 years.

The lawyer ban, Maestro wrote, is meant to stop lawyers seeking to “improperly leverage their access to MSG’s venues to craft and develop discovery strategy by engaging in improper communication with MSG employees during pending litigation.” He also argued that the policy “temporarily limits the admission of less than 0.8% percent of New York lawyers, less than 0.03% of the five million visitors to MSG’s venues every year, and less than 0.01% of all New Yorkers.”

A hearing on the SLA article 78 motion is preliminarily scheduled for March, while a decision on the tax break is due April 1 in Albany.