"NBA.com's David Aldridge reports that
what lead to Mike D'Antoni's departure from New York was a disagreement with owner James Dolan involving a trade. D'Antoni wanted to move
Carmelo Anthony, who struggled inside D'Antoni's system, for the Nets'
Deron Williams. That trade would have given the Nets the star they wanted last year when he forced his way out of Denver in a contract year to New York. The Nets tried furiously to convince Anthony to force a trade to New Jersey instead, but were rebuffed, at which point they acquired Williams. From NBA.com:
'Antoni, the source said, had been advocating that the Knicks attempt to trade Anthony to the New Jersey Nets for guard Deron Williams, a deal D'Antoni believed would be beneficial for both franchises. But Dolan categorically declined that request, and the “conflicting visions” between the owner and head coach about Anthony meant there was no way forward.
D'Antoni had hoped the Knicks' inspired and winning play with Lin as the centerpiece — while Anthony and Stoudemire were injured — would convince Dolan the Knicks could win without Anthony. Bringing Williams from the Nets would also have eases the burden on Lin, D'Antoni believed, allowing Lin to settle into a three-guard rotation.
via
NBA.com | Hang Time Blog.
It makes sense why Dolan would kill this deal and then essentially force D'Antoni out.
Pairing one of the top five point guards in the league with the best point guard and pick and roll coach in the league and a devastating power forward (when healthy) along with the best alley-oop center in the league who defends would never work. It's much better to focus on an isolation-heavy wing who struggles with passing the ball along with Stoudemire. Wait, no it doesn't. That doesn't make sense at all."