INDIANAPOLIS -- Larry Bird's first lesson on how to be a general manager in the NBA came well before his first lesson on how to be an NBA player. The education of the Pacers' boss was taught early and delivered thoroughly by the Celtics all-time master planner.

Bird was a junior at Indiana State when Celtics legend Red Auerbach did something Auerbachian. He took advantage of a loophole and drafted Bird in 1978, a year before his graduation. According to the rules then, Bird was draft eligible because he'd already spent four years in college; one year was burned at Indiana (where Bird never played a game) and a community college. Still, it was a gamble because the Celtics used the No. 6 overall pick on a guy who wouldn't play for them that season, and they held his rights only as long as they signed him before the 1979 draft.

Even Bird shakes his head today: "At the time I couldn't believe it. I didn't know why Red did that."

Here's why: The 1978 draft was soft; Mychal Thompson was the first pick and Rick Robey the third. Also, Auerbach sensed Bird would be special and was willing to waste a year waiting for him.

"Red later told me that a year was not a long time," Bird said. "That stuck with me."

Plenty more from Auerbach stuck with Bird, who's applying those lessons to his job as president of the Pacers. By pulling players from the draft and getting them through trades and free agency, Bird has managed to put the Pacers in position to win the East and perhaps a championship this summer. His body of work in the front office earned him an Executive of the Year award (named in honor of Auerbach) and once again has the Pacers, after some recent additional cosmetic surgery, wearing the look of a serious contender.

His office, surprisingly cramped, at Bankers Life Fieldhouse is plain and simple, much like the executive who works inside. There isn't any visible proof that Bird won three championships with the Celtics: No photos of him soaked in champagne from victory, no trophies, no framed jerseys. Just a small roundtable ("pull up a seat," he said) surrounded by four chairs next to his desk, where a phone and documents are the only signs of clutter. Even as a player, Bird was never into nostalgia. He's more interested in the journey before him, not behind him.

Bird would hardly be the first all-time great player to achieve a measure of respectability in the front office; until further notice, the conversation begins and ends with Jerry West. Also, Pat Riley has successfully managed to go from coaching a champion to building one in Miami. Bird is moving in that direction, though, and also doing it with the financial handcuffs and cold realities that come with operating in a small Midwestern market and with a budget-minded franchise.

Unlike West, Bird will never be able to afford Shaq and Kobe at the same time. Nor is Indianapolis, which lacks a beach and balmy skies, sexy enough to seduce a free agent like LeBron James, as it was for Riley in Miami. The built-in challenges for Bird, therefore, are unique but to hear him, not necessarily impossible to overcome.

"It's been a long process," he said.

Along with his other mentor, Donnie Walsh, Bird helped build the Pacers into a 50-game winner in the early 2000s, then watched it collapse after the fight in Detroit. In order to dump Ron Artest and Stephen Jackson and Jermaine O'Neal, Bird had to take back bad contracts, which had years to run. Bird was forced to endure a long rebuilding process. When that finally ended, he then built what you see now from the ground up, without getting a Shaq or LeBron or Tim Duncan through the draft. All GMs make mistakes, but he couldn't afford to make a major one, which would set the Pacers back. And he hasn't.

Paul George, Roy Hibbert and Lance Stephenson came through the draft. David West was a free agent. George Hill and Evan Turner came in trades. Bird assembled the nucleus of this team without a pick higher than 10 in the draft and being unable to talk an A-list free agent into coming to Indiana, let alone affording one. By comparison, Phil Jackson won't be burdened by such annoying nuances in New York.

Given those demands, Bird had to nail all of his big decisions, and it helped that he was in Boston all those years and downloading what he'd witnessed from Red.

"Just to watch him meant a lot," Bird said. "When he made his mind up and made a decision, whatever the consequences were, he lived with it. That makes a difference with me now. When I do something and it doesn't work, at least you thought it was going to work at the time you made the decision."

Auerbach's next brilliant move came two years after drafting Bird. He held the No. 1 pick in a draft that contained Joe Barry Carroll, a big man in demand. Instead, Auerbach flipped the pick to the Warriors for a raw and unproven Robert Parish plus the No. 3 pick and used it on Kevin McHale. A front line for the ages was born, and more than 30 years later history still shows that decision to be the Mona Lisa of NBA trades.

"I didn't know much about Kevin at the time of the trade," said Bird, "but after our first practice, I said this guy is unbelievable. Getting those two turned our team around."

Auerbach gradually began to consult and trust Bird's input before making trades, planting the seed that would help Bird become a GM one day. One of Auerbach's next moves was initially rejected by Bird, however.

"Rick Robey was one of my best buddies on the team," Bird said. "I mean, we hung out together, ate together, he and I were close. Red came in and said he was trading Rick. I said, `You can't do that, Red. He's my buddy.' Red said he was trading him to Phoenix anyway. I was upset. I asked who was he trading him for?

"He said Dennis Johnson. I go, `Dennis Johnson? Oh, yeah. You gotta make that deal.' When he said Dennis Johnson, my whole outlook changed."

Bird laughs about it now. Lesson: Don't get too connected to players, or coaches, for that matter. It's bad for business and gets in the way of doing business. Bird thought of that last month when a deal was on the table for Danny Granger, perhaps the franchise's best player in the years after Reggie Miller and before George, the player who helped Bird during the painfully long losing period in the post-Detroit fight.

"Trading Danny was the toughest thing I ever had to do," Bird said. "He's the last guy I thought I'd trade. About 20 minutes before we made the deal, I told Kevin Pritchard (the assistant GM) that I gotta wait. I didn't know if I could do it.

"But I remembered what Red taught me. The franchise is always first. He said he had great players leave and people would say the franchise was going to fold and all of that. Well, that didn't happen. The franchise is the most important thing and so in this case I had to do what's best for the franchise."

Trading Granger, who was aging and slow to recover from knee surgery, allowed the Pacers to get Turner, who's younger and can play multiple positions. The verdict on this deal will arrive in the playoffs, especially if the Pacers meet Miami for the East title.

Once he left coaching and went into the Pacers front office, Bird served as an apprentice under Walsh, who's now a consultant to Bird, and Walsh helped teach Bird the complexities of the cap and how to cope with small-market constraints. Before Bird arrived, Walsh built the Pacers into consistent 50-game winners by drafting Reggie Miller and constantly adding enough veterans and young players to compliment the Pacers' only star while also meeting the budget. That's what Bird is doing with regard to George. The Pacers don't generate big profits at the box office, therefore they can't justify a payroll pushing $80 million.

"My owner will let me spend up to the (luxury) tax," said Bird. "Will he ever let me go over the tax if we had to? I don't know, but we don't even want to go there. We're going to do whatever we can to stay under the tax and build the best team we possibly can. With all the rule changes lately, it makes the playing field level with the big market teams. I like that. It gives us a chance although there will always be a couple of teams who'll always deal with the tax."

Auerbach, and even West for a while, never had to deal with free agents catching the next cab out of town or the salary cap issues of today. The game and the league are different now. Bird: "After a while, Red told me, `I don't get all this cap stuff.' Because of that you could tell he was moving away from the personnel side and toward the president side full-time."

Besides the challenge of building a winner while living in the same conference as the two-time champion Heat and LeBron, Bird is battling his own legacy. It's not fair to ask him to follow in the exact footsteps as Auerbach; nobody can. But: Can he possibly do as a GM what he did as a player?

"I don't get involved in those outside influences, as far as those perceptions and pressures," Bird said. "I stay focused on what I'm trying to accomplish. Pat and Jerry West had great success. I'm not in the same league as guys who've won several championships. My goal is to take this small team in the small city and get there. Get a chance to win one.

"We want the chance to be the last team standing. I want these guys to play for a championship. I know how tough it is to win one."