NBA Finals: Thunder and Pacers Make History as First Pair of Non-Luxury Taxpayers
The Oklahoma City Thunder and Indiana Pacers have reached the 2025 NBA Finals, making history in the process. These two small-market teams finished off their conference finals opponents in quick fashion, with the Pacers defeating the New York Knicks on Saturday night. Notably, this will be the first NBA Finals where neither team is paying the luxury tax.
According to Spotrac, the Pacers ranked 18th in the NBA in payroll this season with $169,149,491, while the Thunder ranked 25th with $165,601,091. In comparison, the Knicks were fourth with $188,877,651, and the Minnesota Timberwolves, whom the Thunder beat in the Western Conference finals, were second at $202,790,231. The luxury tax threshold this season was $170,814,000, with 11 teams exceeding that number, seven of which made the playoffs.
The luxury tax was instituted in 2002, and since then, every NBA Finals has featured at least one luxury tax team. Of the 44 teams to reach the Finals, 26 have been taxpayers. Among the 22 champions, 16 have been taxpayers. The exceptions include the 2006 Miami Heat, 2014 San Antonio Spurs, 2015 Golden State Warriors, 2017 Warriors, and 2020 Los Angeles Lakers.
How did the Thunder and Pacers reach the NBA Finals with such relatively low payrolls? While their paths to the Finals differed, both teams share similar financial strategies. Both feature sizable contracts for their point guards and top big men, with the rest of the roster consisting of 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 last offseason. Their other starters include Lu Dort ($16.5 million), Chet Holmgren (rookie contract), and Jalen Williams (rookie contract). The Thunder bolstered their core with deals like Hartenstein and defensive ace Alex Caruso, whom they traded for and 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 max extensions. The rest of their starters include Myles Turner ($19.9 million), 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.
Both teams exemplify small-market success with long-term plans coming to fruition and no albatross contracts in sight. The Thunder’s classic rebuilding plan involved trading away Paul George for Gilgeous-Alexander and draft capital, while the Pacers retooled with the Haliburton-Domantas Sabonis trade and then acquired Siakam.
However, these rosters won’t remain cheap for long. Every young player on the Thunder is due for a significant pay raise. 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 indicated they intend to pay up for Gilgeous-Alexander, but roster building will be challenging with those three deals plus Hartenstein on the books. OKC, the smallest market in the NBA, may need a big-market payroll to keep everyone.
The Pacers face their own challenges, with Turner hitting free agency and in line for a major raise.