NEW YORK - Madison Square Garden and New York Knicks coach Isiah Thomas reached an $11.5 million settlement of the sexual harassment case brought by a former team executive.

The deal came yesterday as Anucha Browne Sanders was preparing to return to U.S. District Court in Manhattan, where her description of her ordeal with the Knicks exposed the club's tawdry side, from its dysfunctional clubhouse to star player Stephon Marbury's sexual exploits with an intern.

A jury awarded her $11.6 million in punitive damages. The settlement replaces that award.

"I am extremely pleased that we have reached a settlement," Browne Sanders said in a statement. "The jury's verdict in this case sent a powerful and enduring message that harassment and retaliation at Madison Square Garden will not be tolerated."

The case was supposed to resume this week before U.S. District Judge Gerard E. Lynch, who was set to decide how much Browne Sanders was owed in compensatory damages, a payout that usually involves lost wages and future loss of income.

By settling, the Knicks avoided paying Browne Sanders' legal fees, while she receives her money faster and avoids the possibility of having her award reduced on appeal.

Although Browne Sanders had demanded the right to resume working for the Knicks, one of her lawyers, Kevin Mintzer, said she will continue working at the University at Buffalo as an associate athletic director and senior woman administrator.

"As I have said before, I am completely innocent," Thomas said. "This decision doesn't change that. However, this is the best course for Madison Square Garden, and I fully support it."

Because the jury was unable to reach a verdict on one of the accusations against Thomas, the possibility of another trial loomed. It would have brought with it another wave of negative publicity about the team.