“In Donnie, the Knicks have secured the services of a seasoned basketball professional who is held in high regard throughout the league and to whom I have often turned for input on basketball matters over the years,” commissioner David Stern said in a statement.

“Donnie, in turn, is joining one of our storied franchises, whose team and arena are rich in NBA tradition, and he gets to return to his hometown and a metropolitan area that many of his family members call home.”

Walsh will report directly to Dolan — Thomas reported to MSG Sports president Steve Mills — and has been assured there will be no interference from above. Dolan remains loyal to Thomas, but Walsh said that won’t be influence his decision concerning a coach.

“He’s more or less left this up to me,” Walsh said of Dolan.

The 67-year-old Walsh recently announced he was leaving the Pacers after 24 years with the organization. He joined the Pacers’ front office as general manager in 1986, became team president in 1988 and CEO in 2003. He helped the franchise rise from NBA laughingstock to title contender.

“One of the highest things on my list is Donnie’s happiness,” Pacers co-owner Herb Simon said. “If that is what he wants, I’m very happy for him. He has given us 24 years of incredible service. I think he’ll do a great job.”

Walsh also said he needed to talk to players like Stephon Marbury and Eddy Curry before deciding their future with the team. Like many people throughout the league, Walsh said the Knicks have talented individuals on their roster and believes the problem could be “the mix of players.”

“Beginning of the season, if you just looked at the roster, you’d say these guys could be pretty good,” Walsh said. “And I really thought that.”

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Dolan will even allow Walsh to dictate his media policy. The Knicks don’t allow individual interviews with players or staff unless a public relations official is present, and Walsh is known to be friendly with the media.

“I think access is a big part of most franchises,” Walsh said.

The Knicks and Pacers once had a fierce rivalry, meeting in the Eastern Conference finals in 1994, 1999 and 2000. Walsh remembers what Madison Square Garden was like back then, and wants it to be that way again.

“That’s it. That was it. That is it. That’s where I want to go to, get that back,” he said. “That’s what I’d like.”

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