Madison Square Garden Could Face ‘Disciplinary Action’ On Liquor License After Billionaire Dolan’s Ban On Lawyers

Madison Square Garden hit on a novel way to get back at the many plaintiffs’ attorneys involved in litigation against the company and its affiliates: bar them from entering the “world’s most famous arena” and its related venues.

Now the New York State Liquor Authority says giving paying customers the heave-ho might not be kosher. Such bans could lead to MSG facing “disciplinary action” in regard to its liquor license, according to an advisory letter issued last week by the state agency.

The letter says that “as a condition of your license your premises must remain open to the public” and that “groups or individuals cannot be excluded on the basis of criteria that are not directly related to the your duties under your [liquor] license.” If the authority finds that violations have occurred, it may take “disciplinary action against your license,” the letter adds.

MSG has for months reportedly been denying entry at MSG, where the NBA’s New York Knicks and the NHL’s New York Rangers play; at Radio City Music Hall, home of the Rockettes and their popular Christmas show; and at two concert venues, the Beacon Theater and the Chicago Theater.

In response to questions from Forbes, an MSG spokesperson said, “We are confident that our policy is in compliance with all applicable laws including the New York State Liquor Authority.”

Madison Square Garden Entertainment, which owns and operates MSG, doesn’t break out alcohol sales in its annual report, but it generated roughly $110 million from food, beverage and merchandising at its entertainment venues in the fiscal year that ended June 30. The company posted $1.7 billion in total revenues for the fiscal year. The filing notes that any disruption of its ability to sell alcoholic beverages could have a “material negative effect on our business and our results of operations.”

James Dolan, MSGE’s chairman and CEO, is among eight people and one LLC listed as principals on the liquor license. Led by patriarch Charles Dolan, the Dolan family, which owns the Knicks and Rangers through sister company MSG Sports, is worth $4.6 billion, according to Forbes. MSGE share prices have fallen precipitously from a 52-week high of $84.57 to $43.00 on Wednesday. The Dolans collectively own 8.4 million shares of MSGE.

The company first announced the ban, which applies to all firms representing plaintiffs suing MSG or its affiliates, in June. It applies only to lawyers and not to other employees at the firms.

MSG instituted the unusual ban “because of the adversarial nature inherent in litigation proceedings, and because of the potential for contact with the company’s employees and disclosure outside proper litigation discovery channels that could result from the presence” of any adversarial lawyers at the company’s venues, MSG lawyer Hal Weidenfeld wrote in a June 24 letter obtained by Reuters.

Plaintiffs’ lawyers from Davidoff Hutcher & Cintron sued, with a New York Supreme Court judge ruling that “the plaintiffs may not be denied entry into any shows where they possess a valid ticket.” However, the judge also ruled that MSG could refuse to sell tickets to the plaintiffs and could revoke them at any time before entry, as well as bar them from sporting events at its venues. In a statement, MSG called it a “clear win.”

How MSGE has enforced the ban has been the subject of controversy. One lawyer at the firm Grant & Eisenhofer, who is not involved with her firm’s litigation with MSG and was not aware of the policy, alleged in a sworn affidavit that the venue used face-recognition software to identify her, according to Reuters. While attending a concert at MSG with her husband, she said, she was approached by employees and asked to present identification. She refused and was correctly identified before being removed from the arena. MSG did not reply to a request for comment on this specific incident.

With additional reporting by Hank Tucker.