All I can say, is it that is was part of the alignment agreement when the 4 former ABA teams were brought into the NBA back in 1976. It was thought to be the best geographical alignment structure, at that time.
Back then, there were only 22 teams and 4 Divisions. The four former ABA teams, that were being merged into the NBA, were split between the two conferences (Eastern and Western). The then New York Nets (now New Jersey) and San Antonio Spurs were placed in the Central Division of the Eastern Conference. While both Indiana & Denver were placed in the Midwest Division of the Western Conference. Odd, I know.
Interesting point is the Spurs were in a division with Houston, Washington, Cleveland, New Orleans (now Utah Jazz) and Atlanta. Here's what it looked like:
http://www.nba.com/history/standings/19761977.html
1976-77
Eastern Conference
Atlantic Division
Philadelphia 76ers
Boston Celtics
New York Knickerbockers
Buffalo Braves
New York Nets
Central Division
Houston Rockets
Washington Bullets
San Antonio Spurs
Cleveland Cavaliers
New Orleans Jazz
Atlanta Hawks
Western Conference
Midwest Division
Denver Nuggets
Chicago Bulls
Detroit Pistons
Kansas City Kings
Indiana Pacers
Milwaukee Bucks
Pacific Division
Los Angeles Lakers
Portland Trail Blazers
Golden State Warriors
Seattle SuperSonics
Phoenix Suns
In 1980, the NBA realigned its divisions again by moving the Spurs, Houston, Denver, Kansas City (now Sacramento), Utah (formerly New Orleans) and the newly formed Dallas Mavericks to the Midwest Division of the Western Conference. The Central Division was realigned to resemble more of what it currently looks today, as Indiana, Cleveland, Detroit, Milwaukee, Chicago & Atlanta, all moved over to this division of the Eastern Conference.
http://www.nba.com/history/standings/19801981.html
1980-81
Eastern Conference
Atlantic Division
Philadelphia 76ers
Boston Celtics
New York Knickerbockers
Washington Bullets
New Jersey Nets
Central Division
Milwaukee Bucks
Chicago Bulls
Indiana Pacers
Atlanta Hawks
Cleveland Cavaliers
Detroit Pistons
Western Conference
Midwest Division
San Antonio Spurs
Kansas City Kings
Houston Rockets
Denver Nuggets
Utah Jazz
Dallas Mavericks
Pacific Division
Phoenix Suns
Los Angeles Lakers
Portland Trail Blazers
Golden State Warriors
San Diego Clippers
Seattle SuperSonics
Interesting note: In 1978, Detroit was moved to the Central Division of the Western Conference, replacing Washington, which moved to the Atlantic Division. Imagine the Spurs and Detroit as Division rivals?
Another note: Over the course of the many realignments, the Atlantic and Pacific divisions teams pretty much resembled the way they look today.

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