Donnie Walsh out as Knicks president in shocker

UPDATE 4:16 pm: According to Howard Beck at the New York Times, another sticking point of negotiations was Dolan’s insistence that Walsh take a 40 percent paycut, from $5 million down to $3 million. Yes, it’s still a boatload of money, but what if your boss asked you to take a 40 percent paycut? It’s offensive, especially after he slashed the Knicks payroll in half.

The other thing of note is that decision seemed to catch Walsh and pretty much everyone with the organization off guard. It had been expected that he would return for at least another year to finish the rebuilding job.

11:34 am: Donnie Walsh, the man who returned the Knicks to the playoffs while getting them out of salary cap hell at the same time, is out as the president and general manager of the Knicks.

The move was announced in a press release Friday that called the move “mutual.” That’s a loose interpretation of the word, Walsh had said many times he wanted to finish the job he had started with the Knicks. Here is what Knicks owner James Dolan said.

”...Donnie Walsh and I have mutually agreed that he will be leaving his position as president, basketball operations of the Knicks at the end of June. Donnie will remain with the team as a consultant for the 2011-12 season. In a relatively short time with the Knicks, Donnie made a tremendous impact, which will be felt for many years to come. We thank Donnie for his leadership, hard work and many contributions to the revitalization of the team.

Glen Grunwald will step in as the interim GM. (For the record, Grunwald came to the Knicks from Toronto, where he was hired as an assistant GM by Isiah Thomas then brought with Thomas to the Big Apple... just saying). Former Denver executive Mark Warkentien also remains in the Knicks front office, but he didn’t get the main job.

Walsh’s contract was up after this season but he had stayed on since April 30 as two sides were reportedly close to a two-year extension. However, as part of that Walsh demanded autonomy to make basketball decisions — Dolan had come in and taken over the trade for Carmelo Anthony, offering far more than Walsh had wanted and stripping the team of role players. Walsh wanted control. Dolan clearly was not willing to give that up. At age 70, Walsh didn’t need to put up with this.

Walsh was in the right here. He had not been perfect — and in Dolan’s eyes Walsh was unable to deliver LeBron James, even though Dolan is largely the reason James had doubts — but from when he took over Walsh had cut the Knicks payroll in half while getting the team back to the playoffs. Walsh built the foundation of future success for this team, he deserved the chance to build the building.

The search for a long-term replacement is on.

However, Dolan is still tight with former GM Isiah Thomas and this can only be seen as a win for his influence in the organization.