NBA Finals: Thunder and Pacers make history as first pair of non-luxury taxpayers

Yahoo

01-06-2025

The Oklahoma City Thunder and Indiana Pacers have reached the 2025 NBA Finals, and made some history in the process.
The two small-market teams finished off their conference finals opponents in brisk fashion, with the Pacers finishing the job against the New York Knicks on Saturday night. As Spotrac's Keith Smith noted Wednesday, the Thunder-Pacers series will be the first Finals in which neither team was paying the luxury tax.
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Per Spotrac, the Pacers ranked 18th in the NBA in payroll this season with a figure of $169,149,491, while the Thunder ranked 25th with $165,601,091. Meanwhile, the Knicks were fourth with $188,877,651, while the Minnesota Timberwolves, whom the Thunder beat in the Western Conference finals, were second at $202,790,231.
The threshold for the tax was $170,814,000 this season, with 11 teams total exceeding that number. Seven of those teams made the playoffs.
The Pacers and Thunder were both in the bottom half of NBA payrolls this season. (Photo by)
(Steven Ryan via Getty Images)
The luxury tax was instituted in 2002. Since then, every NBA Finals has reportedly featured at least one luxury tax team, though no taxes were paid in 2002 and 2005 due to a lack of basketball-related income. Of the 44 teams to reach the Finals, 26 have been taxpayers.
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Of the 22 champions, 16 have been taxpayers. The non-taxpayers, per Smith: the 2006 Miami Heat, 2014 San Antonio Spurs, 2015 Golden State Warriors, 2017 Warriors (somehow) and 2020 Los Angeles Lakers.
How did the Thunder and Pacers reach the NBA Finals with such cheap teams?
While they reached this point with different philosophies, the Thunder and Pacers actually share fairly similar balance sheets. Both teams feature a pair of sizable contracts for their point guards and top big men, with the rest of the roster filled out with reasonable veteran deals and rookie contracts.
The Thunder signed Shai Gilgeous-Alexander to a five-year, $172 million maximum rookie extension in 2021 and center Isaiah Hartenstein to a three-year, $87 million deal in free agency last offseason. That's two of their starters. Their other three are Lu Dort (a reasonable $16.5 million salary in 2024-25), Chet Holmgren (rookie contract) and Jalen Williams (rookie contract).
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With some of the best young talent in the NBA on such cheap deals, the Thunder went out and bolstered their core with deals like Hartenstein and defensive ace Alex Caruso, whom they traded for then gave a four-year, $81 million deal.
Meanwhile, Pacers stars Tyrese Haliburton and Pascal Siakam are both making $42,176,400 this season on very similar max extensions. The rest of their starters: Myles Turner ($19.9 million this season), Aaron Nesmith ($11 million) and Andrew Nembhard ($2 million).
The only other Pacer making more than $10 million is key bench player Obi Toppin, at $12,975,000.
With both teams, you can see a long-term plan coming to fruition, and no albatross contracts in sight. The Thunder represent a classic rebuilding plan of stripping the roster to the studs with the deal that sent away Paul George in exchange for Gilgeous-Alexander and a truckload of draft capital, while the Pacers retooled a group that had hit its ceiling with the Haliburton-Domantas Sabonis trade, then pushed further ahead with the Siakam trade.
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Both teams are a model of small-market teams hitting the jackpot, though we should stress neither of these rosters will remain cheap for long.
These teams are relatively cheap, for now
No matter how the Finals go, every single young player on the Thunder is going to have an enormous pay raise coming. Gilgeous-Alexander will be eligible for a record five-year, $380 million supermax deal in 2026, while Holmgren and Williams will be eligible for $592 million in rookie max extensions.
The Thunder have made clear they intend to pay up for Gilgeous-Alexander at least, but roster building would be a bit harder if they have those three deals in addition to Hartenstein on the books. OKC is the smallest market in the NBA, but has a big-market payroll in its future if it wants to keep everyone.
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The good news for the Thunder, though, is every major contributor is already under contract for next season. The same cannot be said about the Pacers, who have Turner hitting free agency and in line for a major raise.