Again, you fail to understand the context of history. Completely.
While Hobart were averaging maybe 3000 per game, it was at a time when the mainland city clubs were averaging closer to 6-8k. Sydney was selling out almost every week, Adelaide was rocking, the Melbourne teams were drawing big crowds.
Back then 3000 at Hobart or 2000 (max) packed in at Geelong, with no chance of bigger crowds or in Geelong's case, a bigger venue, was not anywhere near where the rest of the league was. Gold Coast were in a terrible venue and both Geelong and Gold Coast were seen to have untenable financial models.
Geelong's model could never survive because their venue was just too small. Forget the myths of 2000+ people at a SEABL game, the Geelong Arena never crammed more than 2000 people into it.
Now, you will need to find a place where I said paying out those teams was sensible?
Because I have not said that have I?
I said those teams were paid out (it was a little History lesson for you), and I said that Mal Speed (not Palmer) negotiated those deals. And I said it was a planned outcome. The other teams wanted the poorer performers in the league out. When Geelong and Gold Coast came to town they drew poor crowds, they wanted more big games. And guess what... that is what TV and sponsors wanted too....
I agree, they could have allowed those teams to fold without paying them out because that is what would have happened.
Of course the alternative to paying them out might have been to watch them die awful, long agonising deaths and re-berthing as we saw become PR disasters at places like Canberra and Newcastle (and now Gold Coast), which of course, was what was allowed to happen AFTER Palmer was released from the league.
As for the nonsense of Geelong being a strong recruiting area - of what relevance is that? And of what truth is it? The last and only player from Geelong to play NBL since they left the NBL (from memory) is Herbert. That's hardly a strong recruiting area, no matter how successful the Supercats have been at the next level.