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Good Thursday Morning. Here’s the rundown of this week’s Sports Business Playbook:

• 📰 This Week’s Topic: The NBA Finals tip off tonight. We’re getting you ready by analyzing the off the court matchup between the Pacers and Thunder

• 🤯 “Whoa of the Week”: MLB’s revenue disparity on display, and F1’s sponsorship heater

• 💪 Weekly Reminders that Sports are Awesome: A great MLB call-up, and a fun NHL Stanley Cup Promo

Hey team,

The NBA Finals tip off tonight at 8:30pm EST, with the Indiana Pacers traveling to Oklahoma City to take on the Thunder.

The 2025 playoffs have delivered some exceptional series, and while OKC is heavily favored in the Finals, the Pacers have proven that you can never count them out (see: Game 1 of the Eastern Conference Finals against the Knicks).

The winner of the series will be the seventh different champion in seven years, a testament to the NBA’s focus on league-wide parity and team building. This pairing also represents an interesting sports business angle, with two small (market) but mighty clubs making it to the doorstep of history.

In this week’s SBP, we’re breaking down the 2025 NBA Finals’ off-the-court matchup so you can be business ball knowers while watching the actual games.

The Teams

This year’s Finals represents two clubs who have embraced the midwestern archetype of frugality.

Unlike other leagues that have a “hard cap” where no club can exceed the salary limit, the NBA uses a “soft” salary cap, where there are various stipulations that allow teams to go over the cap but can also result in paying a penalty, or “luxury tax,” for going too far over. The luxury tax charges teams between $1.50 and $5 for every dollar the team is above the tax line and is based upon how far over the tax and whether the team is a repeat tax offender.

To show how rare it is for great teams to not be paying the tax man, this Finals matchup will be the first championship since 2003 — the first year of the NBA luxury tax — in which neither team is having to pay extra.

The Pacers ranked 18th in payroll this year ($169 million), and the Thunder spent $165 million, good for 25th, while fielding the league’s fourth youngest roster. For reference, the league’s luxury tax threshold this year was just over $170 million, so over half the league was paying. The Phoenix Suns, riding a league-leading $214 million payroll to an 11th place finish in the West and missing the playoffs, capped off a disastrous season with a $152 million luxury tax bill.

That being said, both clubs will likely have to contend with this challenge in future years. Their young stars’ initial contracts will come up, and they’ll be faced with the difficult decision of whether to pay to keep the core together or move on from some key pieces to remain in the green.

The Boston Celtics, last year’s champion, are about to be slapped with an estimated $238 million tax bill next year if they keep their current roster in place.

It will be interesting to watch these two teams navigate this double edged sword of their success in years to come.

The Markets

Despite both teams’ success, most casual fans never saw much of either club this year.

The league sets the television schedules for the upcoming season based upon past performance, expected performance in the new season, and general draw/interest.

Both teams had stellar years last year, but their market size holds them back with getting national attention — Indianapolis is the 25th-largest media market in the country/9th smallest in the NBA and OKC is 47th/3rd smallest. Because of this, neither was featured in the A-plus television slots during this year’s schedule — i.e., no opening night or Christmas games).

This is surprising at first glance given the Pacers made the Eastern Conference Finals last year and the Thunder were the number one team in the West last year, predicted to be one of the top teams again in the West this year (they won the conference by 16 games), and they have the league MVP in Shai Gilgeous-Alexander.

But, at the end of the day, the teams in major media markets and/or clubs who have the international superstars sometimes move the needle more than the best on-court performers.

It also will be noticeable at the box office, These will likely be some of the cheapest NBA Finals ticket fans will ever get given the location and lack of demand outside of the regions where the Thunder and Pacers play.

This difference really comes to life when set against the Knicks and Madison Square Garden.

Per The Athletic, the cheapest ticket for Game 5 of the Western Conference finals in Oklahoma City was $172. This was the most expensive ticket in the franchise’s history, yet it cost less than half of the least expensive seat at MSG for Game 5 of the Eastern Conference finals.

Markets matter, and the revenue differences will be stark in these two smaller markets.

Does It Matter?

To the network (in this case, ABC) airing the games, likely yes.

Being tantalizingly close to having the biggest media market in the country featured in the NBA Finals is a tough pill to swallow, and this is the first ever matchup where both teams are ranked outside the 20 largest media markets. Because of these factors (plus the Thunder being big favorites), this year’s Finals is likely going to continue the trend of decreasing ratings — last year’s Finals averaged 11.3 million viewers per game, the lowest since 2007.

Despite all of these ratings concerns, the league is not sweating it.

First, it is about to begin an 11-year, $75 billion media deal next year that essentially locks in cash flows for the next decade. One series is not going to dictate the league’s future, the first few rounds of this year’s playoffs put up significant numbers, and there are myriad other revenue streams that will culminate in plenty of revenue going around.

Second, this series embodies the league’s emphasis on parity and elevating nascent talent.

Many young NBA fans never saw Jordan play live. LeBron James and Steph Curry are in the twilight of their careers. The league needs to cultivate the next crop of stars, and showcasing players on the biggest stage can often lead to long-tail impact.

The positive data points the league can point to on this are Giannis Antetokounmpo and Nikola Jokić. After they won championships with mid to small market clubs, their respective teams’ nationally televised games saw a significant increase in viewership (Bucks: 21%, Nuggets: 32%) the year after winning.

The best case scenario for the NBA is a deep series that provides a satisfying capstone to a good season, makes the TV partners happy (a long series means incremental ad revenue from new inventory sold in the high demand spots of the later games of a see-saw matchup), and makes SGA and Tyrese Haliburton household names for a material percentage of casual fans that will hopefully carry into next year.

Let me know who you think is going to win the series!

🤯 “Whoa” of the Week

Insane, mind-blowing things constantly happen in the sports business world. Here was my favorite of the past week.

1. It’s no wonder the Dodgers and Yankees spend what they do when they make ~4x or more than 2/3rds of the league on every game

2. These stats really astounded me. 10 (soon to be 11 teams) of a global sport that has caught fire in the U.S. punching well above its weight in sponsorship and going toe-to-toe with the 800-lb gorilla that is the NFL

💪 Weekly Reminder that Sports are Awesome

This newsletter is, of course, mostly centered on the business side of sports and the things that happen off the field. That being said, it’s important to remember why we fell in love with sports in the first place, though.

This section is meant to highlight the amazing things that happened in sports this week that serve as that reminder.

1. I will never not post a great MLB call-up story

2. Credit to TNT — they may be losing Inside the NBA, but they’ve got something in the same vein with their NHL coverage

For reference, this is Paul Bissonnette, former enforcer and current podcaster/NHL on TNT goofball

Thanks for reading! Let me know what feedback you have.

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Until next time, sports fans!

-Alex