First of all, thanks for humoring me, guys. I was afraid that the idea would just be ignored as utterly ludicrous. I'm glad that I at least good some debate about it.
I'm not giving up on the idea, but I have thought of some adjustments that I think might improve it. The main one is: There's no need to scrap the lottery. Instead give the first pick to the division three winner and the second pick to the division two winner. Third pick goes to the division three runner up, fourth pick to the division two runner up, and so on down the line. The last ten picks of the first round would go to the division one teams from the bottom up (I don't think anyone would be tanking for the 21st pick in the draft and relegation). If anyone still cares about having a second round, it could either be structured the exact same way as the first round or it could just be linear from the losers of the third division getting the 31st pick to the first division champs with the 60th pick.
I think this system rewards success and at the same time eliminates the "rich get richer" scenario.
Also, we can keep the salary cap in place so the top teams can't just spend even more ridiculous amounts of money than they already spend. Even the richest teams won't be able to afford to have Blake Griffin be the ninth man in the rotation.
With these tweaks in place, I don't actually see how being a non-playoff lottery team in the current format is all that different from being a second or third division team in my proposed system. The biggest difference is that in the tiered division system, it behooves every one of thirty teams to compete to win every night, whereas in the current system that isn't necessarily the case.
