I think that it'd be a powerful deterrent but is too severe and possibly counter-productive. You could have teams sacrificing too much of their long-term upside just to get a short-term boost to avoid relegation. They may surrender draft picks for immediate draft picks, or handicap their cap position in future years just to get enough talent in the current year. A team caught in that vortex could get caught on a mediocrity treadmill, too afraid to be bad that they can never get good. I suppose the difference that I find problematic is that it's binary instead of being able to calibrate the financial punishment (or the ding on their reputation) to get just right amount of deterrence. Though you could potentially relegate without withdrawing all the revenue sharing.
I like then once of of relegation, but how would it fit the overall structure of the NBA and how stadiums are financed? What else about the NBA would have to change for such a system to occur? Wouldn't the monopoly have to get broken up? Anyway, like SamFisher said, no way would the owners vote for such change.
I agree that the owners won't like it. So it's a pipe dream solution. As for the structure, I guess the teams can still play in their arenas for their D-League games, although it wouldn't be as many games as the NBA. The down side is that the auxiliary businesses would suffer losses they would not deserve. To lessen the harshness, instead of losing all revenues, the teams could be paid a certain percentage of the shared revenue.
