I'm a Hoosier transplant, I moved here to Indianapolis from Cincinnati in 1994, although I grew up in NE Ohio. Ohio is a football state, top to bottom, period. Basketball, seriously (from an outsider's perspective) was always first here, especially the Hoosiers but equally the Pacers back then. I will never forget, when I moved here and football season came, I turned on the radio to hear about the Colts, maybe Purdue maybe Hoosiers maybe, etc. Not so much. Back then there would be about 5 minutes of football talk per hour, the rest of the time was Hoosier/Pacer basketball and A LOT of excitement around the Pacers because of the Reggie Miller era, those teams were damn good.
Anyway, the point to my rambling is that AFTER this event, honestly, it felt like going to a Major League Baseball park AFTER the 94-95 strike cancelled year. You could feel that people here, basketball purists felt ashamed that their team was dragged through the mud like that. That the franchise this city fought so, so hard to drag into the NBA from the ABA would be disgraced like that. Many, many people I knew turned their backs on the Pacers and from my perspective (as a casual fan/observer) it took many years for the fans to re-embrace the Pacers. I think they've warmed up and I think winning always helps but I do think that event really put many people off here.