Just cutting teams is a waste, and is stupid if it can be avoided, but mergers and relocations don't work as they are intended to and more often then not cause more problems then they fix, so that leaves only relegation.
Basically everywhere that relegation is used it's worked, but only if there is clear criteria on how and why a club would be relegated and there's a competition of reasonable standard below the top tier comp that is broadcast to similar standards and gets reasonable coverage in the media, which is why for the time being at least relegation would be a bad idea for the NRL cause no such competition exists.
Basically what I'm saying is if the NRL was to attempt to rationalise the comp right now it wouldn't necessarily fail as such but it wouldn't be as successful as it could be, so for the time being they shouldn't rationalise, but what they should do is be building up the lower tiers and making them products in their own right, then in 10-20 years time when the lower tiers have their own national footprints, their own TV contracts and audiences, basically when they are a relatively small but valuable product in their own right, that is when the NRL should rationalise by shuffling things around, not before hand.
As to which clubs I'd rationalise... Well that is a very hard question to answer cause we (the public) don't have access to all the information necessary to make an informed decision on who should and who shouldn't be cut, however I do know that I definitely wouldn't relegate Manly because they are the only team in the North of Sydney, that's not to say that their business doesn't need to be completely restructured, but unless the NRL plan on replacing them with a new team to represent NS in the NRL (or switch them with the Bears) they are safe.
Well in case of relegation, 1 or 2 teams go down, 1or2 go up, correct?
Forget who goes down, everyone has that figured out hypothetically opinionated (manly, cronulla, parra, sydney teams etc)
Who comes up and where are they from, no point relegating manly or gold coast if they run deadlast this year, then promote glebe and newtown
What happens when brsbane come last, or Melbourne?
Relegation won't work in NRL, and you cant say only sydney teams cop relogation that's unfair, were not england, crammed all near each other
I think we as fans of the game know whats good for our game, and dropping clubs isn't a habit we should form for the almighty dollar to prevail, promoting a lower tier team is good but it will take time for their roster to become 1st grade vs the rest of the league
This means you need a 1st grade roster in year 1 of your NRL debut, to not be relogated the following year
Unless it boils down to worst team in a decade relogated, add up the spoons then relegate acordingly, add up the wins in 2nd teir, depending on the area/region
Example cowboys/dropped, Northern pride promoted. but stars need to align to have the pride win so many to be worthy. Its all too fickle, but again a decade can have massive roster changes. Just Spit balling ideas