Well, currently there are 9 teams in Sydney, and most people seem keen to take that down to 4, or even fewer. This would kill rugby league as the premier sport in NSW, and then that would quickly kill it as an international sport (even if one allows that it is barely such as it is).
Why?
Rugby league has 2 main features that are going for it, IMHO.
1) It is a bloody good spectacle.
This won't change no matter where you put teams, but if it was instantly the "best" and only sport to watch, it would already dominate the world. Other people don't necessarily agree that Rugby League is as good as us forumites do. That is why it needs to expand, so that it can seep into other areas.
2) It is tribal.
Killing off tribes will decimate the supporter base. If it needed to start from scratch for some reason, you could still comfortably fit more than 4 tribes in Sydney.
Some facts that fuel this opinion of mine:
Sydney has 4.5 million people. Compare that to Brisbane (2 million), Perth (1.65 million), Adelaide (1.2 million), Gold Coast (580 000), Newcastle (540 000), Canberra (400 000 including Queanbeyan), Central Coast (300 000), Woollongong (290 000), or the Sunshine Coast (240 000), which are all currently operating or proposed areas for NRL teams, and you can see Sydney should have a lot of teams. NQ is a bit harder to judge since fans travel a very long way to get to games from there, but it too would have a population base of about 400 000 (adding Cairns, which is a fair travel, Townsville, and surrounding areas).
(mostly from
http://en.wikipedia.org/wiki/List_of_cities_in_Australia_by_population )
Melbourne of course has nearly 4 million and NZ has 4.4 million, so they could theoretically support a fair few teams, but are not naturally league strongholds, so would need to increase league fandom in their areas first.
If we propose a number of teams for other Rugby League strong areas such as Brisbane (say, 3 teams), GC (1 team), Newcastle (1 team), Central Coast (1 team), Canberra (1 team- I know it is not originally a "strong" league area), Woollongong (1 team), Sunshine Coast (1 team) and NQ (1 team)- then that is a proposed 10 teams for a spread out population of about 4.7 million. 9 teams in a population dense but fairly compact area seems fine compared to that.
Sydney is also continually growing, being one of the few areas in Australia that does consistently grow in population. It is relatively affluent compared to many other areas as well (though it certainly has large portions of working class people, hence the popularity of League in the first place), meaning good numbers of pay TV subscribers.
Last year, Sydney teams attracted 50% more viewers in total to TV than non Sydney teams. Adjusting for 9 Sydney vs 7 regional teams, and not counting finals, Sydney teams still averaged 20% more viewers than non Sydney teams (obviously Brisbane smash ratings as well- an obvious cry out to the NRL for more Brisbane teams).
Even using my much pilloried but beloved Sharks as an example, who could not really have been less appealing to watch in the last 3 years (hopefully), Sharks games drew better pay TV ratings last year per game,(they only had 3 channel 9 games) than many regional teams, including NZ (not counting finals/GF), Canberra, Newcastle, Melbourne and Gold Coast. They also had the single best Pay TV rating game (vs Roosters, who have a similar demographic area) and were prominent in several of the top rating games.
More generally, 15 of the 20 teams that rated in the best 10 games on Pay TV were Sydney teams.
Looking at channel 9, obviously now with 2 Friday night games, 1 Live for QLD and 1 for NSW, it makes sense to have a fair few QLD teams to draw upon. But it also makes sense to still have Sydney teams and plenty of local derbys for the big rating Friday night games.
Not surprisingly, given their good form in recent years and exciting play, for the live NSW slot Wests Tigers, Dragons and Manly had huge ratings (along with the Brisbane juggernaut in QLD), but Souths, Parramatta, Penrith and Canterbury did well too.
(mostly from
http://www.leagueunlimited.com17/tv_ratings_2011.php )
If Sydney crowds seem a little lower than maybe NQ or Newcastle (when they do well), they are certainly no worse than Melbourne, NZ, Gold Coast (last year) and Canberra crowds, but no one is keen to cut down on regional teams, even though they are more expensive to run, and don't rate on TV as highly.
Looking at the big sources of income for the NRL (Free to air and Pay TV rights) and the ease of running clubs in Sydney, with plenty of grounds, close to each other, I'd say there is a reasonable case to expand in Sydney. I reckon a team out of Campbeltown (lets call them the Magpies), one in the inner West (call them the Tigers), and another Northern team (we could call them the Bears) would work just fine in a TV dominated era.
Then we can spread the love through Brisbane (at least 2 more teams, maybe 3), and Perth.
So if we needed to "start from scratch", a high rating, cheaper to run competition than one with a few scattered teams throughout Australia, with a solid base to spread, would be:
11 Sydney teams
1 Woollongong (we could call them the Steelers)
1 Central Coast
1 Newcastle
1 Canberra
1 Gold Coast
3 Brisbane
1 NQ
2 NZ
1 Melbourne
1 Perth
24 teams, play each other once per year, 10 team finals series to rake in the dosh
OR 4 conferences of 6, play own conference twice each (for more local darby matches), 1 for each away, for a long 28 week season but slightly smaller finals (top 5 maybe?).
And yes, I loved having 20 teams in the competition in 1995 (which not surprisingly had great total crowd numbers)!