NEW YORK -- Donnie Walsh's tenure as president and general manager of the New York Knicks is ending, team owner James Dolan said Friday.
"Following a long series of discussions regarding his future role with the New York Knicks, Donnie Walsh and I have mutually agreed that he will be leaving his position ... at the end of June," Dolan said in a statement.
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Walsh will work in a consultant's capacity for the team next season.
The stunning piece of news comes four weeks before Walsh's contract is due to expire, and after several weeks of face-to-face discussions between Walsh and Dolan. The team had imposed a news blackout around the discussions, and neither Walsh nor his agent had commented on his job status since the first round of the playoffs.
Walsh's departure opens questions about whether coach Mike D'Antoni will return for the final year of his contract.
The Knicks had an April 30 deadline to pick up the fourth-year option on Walsh's contract, which he signed in 2008 following the troubled tenure of former team president and coach Isiah Thomas. But that date passed with no action being taken, and Walsh and Dolan were discussing a new contract that would keep him with the team at least through the 2012-13 season. Walsh's desire to have full autonomy was reportedly one of the sticking points.
Thomas has continued to keep in contact with Dolan and was believed by many -- including Walsh, a team source said -- to be influencing the team's personnel decisions.
Walsh gutted the roster over his first two seasons to clear enough salary cap space to sign two maximum-salary free agents. LeBron James was No. 1 on the Knicks' wish list, but they settled for Amare Stoudemire last July and then got their second max player by acquiring Carmelo Anthony from the Denver Nuggets two days before the NBA trade deadline in mid-February.
But the Knicks gave up a lot in the trade -- Raymond Felton, Wilson Chandler, Danilo Galinari, Anthony Randolph, Timofey Mozgov, several draft picks, cash and Eddy Curry's expiring contract -- and there was a school of thought (denied by the Knicks) that Dolan had taken over the negotiations and had undermined Walsh.
The Knicks were swept 4-0 by the Boston Celtics in the first round of the playoffs.
"In a relatively short time with the Knicks, Donnie made a tremendous impact, which will be felt for many years to come," Dolan said. "We thank Donnie for his leadership, hard work and many contributions to the revitalization of the team."
The Knicks said their search for a new president and general manager will begin immediately. Glen Grunwald, the club's senior vice president of basketball operations, will serve as interim GM beginning in July and will oversee all player transactions.
The highly respected Walsh came to his hometown team after spending 24 years with the Indiana Pacers. He joined their front office as general manager in 1986, became team president in 1988 and CEO in 2003, turning the franchise into a perennial Eastern Conference contender that reached the NBA finals in 2000.
He brought professionalism to a Knicks organization that had become an embarrassment on and off the court during Thomas' reign, unloading some of the burdensome contracts that hindered them for years and relaxing the team's media policies.
His draft record in New York was underwhelming -- high lottery picks Gallinari and Jordan Hill are already gone -- but Walsh always said his focus was free agency, believing that was the quickest way to rebuild a team.
He refused throughout the season to talk about his future, including reports he was angered that Dolan got involved in the pursuit of Anthony. But his wife and much of his family had remained in Indiana after Walsh came to New York, so he had reason to leave if he wasn't happy with a new contract offer.