For the sake of argument, let's divide the NHL into tiers. The top tier (Tier A) are teams that have large fan bases and a strong history. These are the top franchises in the NHL. The second tier (Tier B) are teams with strong fan bases and high revenue, but don't have a particularly great history. The third tier teams are those that have strong historical success, but don't pull in big revenue. The lowest tier are those teams that don't make much money and haven't done much of historical note.
Tier A
Boston Bruins
Chicago Blackhawks
Detroit Red Wings
Montreal Canadiens
New York Rangers
Philadelphia Flyers
Pittsburgh Penguins
Toronto Maple Leafs
Tier B
Anaheim Ducks
Calgary Flames
Colorado Avalanche
Dallas Stars
Los Angeles Kings
Minnesota Wild
Ottawa Senators
San Jose Sharks
Vancouver Canucks
Washington Capitals
Tier C
Edmonton Oilers
New Jersey Devils
New York Islanders
Tier D
Buffalo Sabres
Carolina Hurricanes
Columbus Blue Jackets
Florida Panthers
Nashville Predators
Phoenix Coyotes
St. Louis Blues
Tampa Bay Lightning
Winnipeg Jets
Based on this list, it's much easier to see who should stay and who should go within the NHL. Assuming that the league needs to be approximately 30 teams (to keep it inline with the other major American sports leagues), then there needs to be some significant changes. First off, all of the teams in Tier A stay. They've done enough to remain in the NHL as long as it exists. Let's also keep Tier B around. They offer diverse markets and strong fan bases that will expand the popularity of the game. That means a league of 18 teams.
Now let's use a fine-toothed comb to pick through the final 12. Some of these teams may be worth keeping, others may not be. Let's start with the Tier C teams. First off, Edmonton stays. It's the team most identified with Wayne Gretzky, and as such should not be wiped out. It's also in Canada, which is reason enough. The New Jersey Devils should also remain. They're doing well enough financially to warrant their remained existence. That leaves the New York Islanders. Yes, they've won their fare share of Cups and were a dynasty in the 1980s. But New York has proven that it can't maintain two hockey franchises. They are the second least valuable team in the NHL and are not competitive. That means they're the first team on the chopping block.
On to Tier D. The Buffalo Sabres should stay. They're losing money, but have a relatively low percentage of debt. Also Buffalo is as good a location as any for a "small town" franchise. It's near Canada and is in a heavily populated state. The Winnipeg Jets also stick around. They're Canadian and haven't been around long enough for their franchise value to mean much. That leaves the Carolina Hurricanes, Columbus Blue Jackets, Florida Panthers, Nashville Predators, Phoenix Coyotes, St. Louis Blues, and Tampa Bay Lightning. Each team needs to go. They don't make enough money, nor do they have a past worth maintaining. Also, they are the legacy of a terrible error on the part of Garry Bettman and the NHL.
With that, we have eight franchises that need to be relocated. Here they are:
-Carolina Hurricanes
-Columbus Blue Jackets
-Florida Panthers
-Nashville Predators
-New York Islanders
-Phoenix Coyotes
-St. Louis Blues
-Tampa Bay Lightning
The first thing to do is take Carolina Hurricanes and move them back to Hartford. It may be a small market, but the team will draw crowds from the New York and Boston regions as well as appealing to the affluent residents of Connecticut. The next step is to look at a list of potential cities for NHL teams. The following is a list of cities that have made serious appeals for a franchise according to Wikipedia:
-Hamilton
-Greater Toronto Area
-Quebec City
-Saskatoon
-Kansas City
-Seattle
-Las Vegas
-Houston
Of these sites, let's eliminate Kansas City, Las Vegas, and Houston. They all face the same problems as other Sunbelt or Midwestern teams. Those cities lack hockey history and will not draw the crowds necessary to maintain a team (2/3 of revenue is ticket sales). Going off of that, the three obvious choices for teams are Hamilton, Quebec City, and Seattle. All are large markets that are either in Canada or in cold climates. That leaves four more teams that need to be relocated. For the four other cities, here are my proposals: move one team to Portland. Even though it is nearby Seattle, it is still a solid location and one which already has an NHL quality stadium. Put another team in Salt Lake City. It has a young population that spends a lot of money on outdoor sporting activities and would likely support an NHL team. At this point, there are two more franchises that need to be moved. There is also a deficit of cities that fit the needs of NHL franchises. Thus, there needs to be a compromise of sorts. The Islanders will move from Nassau County to New York City, either Queens or Brooklyn. Another team will move to the Toronto Suburbs, despite the criticism of the Leafs. This is an imperfect solution, but it addresses the concerns of population and gate draws.
With that, here is what the new NHL would look like. I still think the two conference, three division set up works best as it is consistent with the other leagues:
Eastern Conference
Atlantic Division
Northeast Division
Coastal Division
New Jersey Devils
Buffalo Sabres
Boston Bruins
New York Rangers
Hamilton Tigers
Hartford Whalers
New York Islanders (Brooklyn/Queens)
Ottawa Senators
Montreal Canadiens
Philadelphia Flyers
Toronto Legacy (Markham)
Quebec Nordiques (Quebec City)
Pittsburgh Penguins
Toronto Mapple Leafs
Washington Capitals
Western Conference
Central Division
Northwest Division
Chicago Blackhawks
Calgary Flames
Anaheim Ducks
Detroit Red Wings
Colorado Avalanche
Los Angeles Kings
Minnesota Wild
Edmonton Oilers
Seattle Seals
Winnipeg Jets
Utah Ice (Salt Lake City)
Portland Storm
Dallas Stars
Vancouver Canucks