The 2025 NBA Finals featured a battle of two small market NBA teams, the Oklahoma City Thunder and the Indiana Pacers. Despite representing two of the NBA’s smallest television markets, the Thunder and Pacers raked in 16.4 million viewers for Game 7 of the NBA Finals, making it the most watched NBA Finals game since 2019.
Analysis reveals that small market teams like the Thunder and Pacers are not just competitive; they have outperformed larger-market teams in spending efficiency over the last 25 years. In a league often dominated by superstar spending, small markets have quietly mastered the economics of winning. Both teams rank among the top five league leaders in Wins Over Payroll Expectation (WOPE), a metric that measures how effectively teams convert salary spending into on-court success.
Defining Small Market NBA Teams
OKLAHOMA CITY, OKLAHOMA - JUNE 22: Shai Gilgeous-Alexander #2 of the Oklahoma City Thunder ... More celebrates with the Bill Russell NBA Finals Most Valuable Player trophy after defeating the Indiana Pacers 103-91 in Game Seven of the 2025 NBA Finals at Paycom Center on June 22, 2025 in Oklahoma City, Oklahoma. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Matthew Stockman/Getty Images)Getty Images
The definition of what constitutes a “small market” NBA team is more art than science. Some definitions cite markets with only one professional sports team while others benchmark on population size. But neither of these metrics alone reliably predicts a team’s market potential. After all, the Green Bay Packers, located in a city with just over 100,000 residents, are the 20th most valuable sports team in the world.
In the NBA, a meaningful differentiator is television market size, as it directly affects local broadcast revenue, media exposure, and long-term brand reach. Generally, smaller television market teams in the NBA bring in less television viewers and less revenue than their counterparts. Therefore, I defined small market NBA teams as the teams in the bottom 25th percentile of the league with respect to television market size. This definition excludes the Toronto Raptors, whose Canadian media dynamics differ from U.S.-based counterparts.
NEW ORLEANS, LOUISIANA - MARCH 9: Ja Morant #12 of the Memphis Grizzlies attempts a dunk against ... More Trey Murphy III #25 of the New Orleans Pelicans during the second half of a game at the Smoothie King Center on March 9, 2025 in New Orleans, Louisiana. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Derick E. Hingle/Getty Images)Getty Images
As of the latest data, the average NBA team operates in a market of approximately 2.5 million TV households. In contrast, teams in the bottom quartile have markets with fewer than 1.32 million households, effectively half the reach of the league average. Based on this criterion, the NBA’s small-market franchises include:
Portland Trailblazers (1.32 million households)
Indiana Pacers (1.21 million households)
Utah Jazz (1.17 million households)
San Antonio Spurs (1.08 million households)
Milwaukee Bucks (932k households)
Oklahoma City Thunder (737k households)
Memphis Grizzlies (673k households)
New Orleans Pelicans (672k households)
These markets represent the NBA’s smallest in terms of television footprint, shaping how these teams build rosters, allocate resources, and ultimately compete in a revenue-driven league.
Success Of Small Market NBA Teams
OKLAHOMA CITY, OKLAHOMA - JANUARY 22: Collin Sexton #2 of the Utah Jazz goes up for a shot in front ... More of Jaylin Williams #6 of the Oklahoma City Thunder during the first half at Paycom Center on January 22, 2025 in Oklahoma City, Oklahoma. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Joshua Gateley/Getty Images)Getty Images
In professional sports, success is most often measured in championships. By that standard, small-market NBA teams have held their own remarkably well. In the last 25 years, the eight small market teams have won 6 NBA championships with San Antonio Spurs capturing 4 of the 6. Interestingly, the seven “large market” NBA teams, as defined as the teams in the top 25th percentile of television market size, also won 6 NBA championships in the same span.
The story of parity is not limited to postseason success. Regular season data over the last 25 seasons reveals that small market teams have averaged 42 wins per season, mid-size market teams have averaged 39 wins per season, and large market teams have averaged 40 wins per season. In other words, market size has not correlated strongly with regular-season success over the last quarter-century. The chart below further demonstrates that market size is not a determining factor in regular season success. Small-market teams not only keep pace with their larger counterparts but often outperform them over multi-year spans
The average number of regular season wins per team shows only small differences by market size.Image created by author.
Payroll Of Small Market NBA Teams
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When it comes to roster construction, large-market NBA teams consistently outspend their smaller counterparts. Comparisons of historical and current payrolls relative to salary caps reveal that large market NBA teams spend on average 129% of the salary cap while small and mid-market teams spend 120% and 119% of the salary cap, respectively. At first glance, that 9–10 percentage point gap might not seem dramatic. But in real terms, it is significant. Consider that the 2024-25 season salary cap was $140.6 million. The difference in spending between large and small market teams is on average around $12.6 million (roughly the rookie season salary of the No. 2 overall NBA draft pick.) This difference often reflects structural financial advantages, such as higher local TV revenue and larger corporate sponsorships.
Higher Payrolls Lead To More Wins
While money alone does not guarantee success, there is a clear and statistically significant relationship between team payroll relative to the salary cap and regular season wins. Using a linear regression model, the analysis shows that for every 0.1 increase (i.e., a 10% increase) in spending relative to the salary cap, a team can expect to win approximately 1.5 additional regular season games, all else being equal. This relationship is highly significant (p < 0.001), indicating a strong and consistent pattern across seasons.
San Antonio Spurs' French forward-center #01 Victor Wembanyama lays up the ball during the NBA ... More basketball game between the Indiana Pacers and the San Antonio Spurs at the Accor Arena - Palais Omnisports de Paris-Bercy - in Paris on January 23, 2025. (Photo by JULIEN DE ROSA / AFP) (Photo by JULIEN DE ROSA/AFP via Getty Images)AFP via Getty Images
To explore the possibility of diminishing returns, a quadratic term was added to the model. With this addition, the model shows that there are diminishing returns as teams spend more over the salary cap (and eventually, possibly a decline).
The plot below visualizes this relationship, showing each team’s regular season win total as a function of payroll normalized to the salary cap. The strongest correlation appears between 1.0x and 1.5x the cap, where most teams cluster. Beyond that, gains flatten, reinforcing the notion of diminishing marginal returns. These results are in line with previous findings out of Harvard.
Payroll relative to salary cap is strongly related to regular season wins. The x axis shows team ... More payroll relative to the season salary cap. The y axis shows the number of regular season wins. Each dot represents a team's performance in a given season where the dots are colored by the market size. The data span the last 25 seasons.Image created by author.
Wins Over Payroll Expectation
This analysis enables a deeper exploration of how efficiently NBA teams translate salary spending into on-court success. The linear regression model that relates NBA team payroll (adjusted to the salary cap) with regular season wins can likewise predict the expected number of regular season wins based on a team’s payroll. Then, it is possible to compute the Wins Over Payroll Expectation (WOPE) by subtracting the true number of regular season wins from the expected number of regular season wins. A positive WOPE indicates that a team outperformed its payroll-based expectations, offering a clear measure of spending efficiency across the league.
This is a measure of team performance relative to spending that is analogous to baseball’s Wins Above Replacement (WAR), the metric that defined the “Moneyball” philosophy.
INDIANAPOLIS, INDIANA - APRIL 29: Tyrese Haliburton #0 of the Indiana Pacers takes a shot against ... More Giannis Antetokounmpo #34 of the Milwaukee Bucks during overtime of Game 5 of the 2025 NBA Playoffs at Gainbridge Fieldhouse on April 29, 2025 in Indianapolis, Indiana. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Justin Casterline/Getty Images)Getty Images
The results are revealing. On average, small market teams have a WOPE of +2.24, meaning they outperform payroll-based expectations by more than two wins per season. Mid-size and large market teams have an average WOPE of -0.75 and -0.91, respectively.
These differences are not only meaningful, they are statistically significant. Both an ANOVA test (p = 0.009) and a Kruskal-Wallis test (p = 0.013) confirm that small-market teams consistently outperform their peers in terms of spending efficiency. This suggests that small market franchises have adopted a kind of NBA “Moneyball” model.
The Success Of Small Market NBA Teams
INDIANAPOLIS, INDIANA - JUNE 19: Shai Gilgeous-Alexander #2 of the Oklahoma City Thunder attempts a ... More layup against Pascal Siakam #43 of the Indiana Pacers during the first quarter in Game Six of the 2025 NBA Finals at Gainbridge Fieldhouse on June 19, 2025 in Indianapolis, Indiana. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Maddie Meyer/Getty Images)Getty Images
Whether the efficient spending is fueled by superior analytics, sharper scouting, or a commitment to player development, it is clear that small market teams have carved out a winning formula. Despite operating with fewer financial resources and smaller media footprints, these franchises consistently outperform their mid- and large market counterparts on a dollar-for-dollar basis. In 2025, that efficiency narrative hit center stage: the NBA Finals featured a dramatic and entertaining duel between two small market NBA teams.