I would make a few deals at the deadline to start to sell off players on 1yr deals...sell high on Donato and dump Sorensen, Nieto, and send Marleau wherever he wants to go. After this season, I would clean house. This team is officially purgatory bound even if they have a .500 season, so I'd take the enormous hit and commit to it. Here's what I think the realistic steps would be (generally):
1) Fire DW...I think he's a solid GM, but I don't trust a guy who has been here for 15+ years and has never rebuilt to tear down his creation. It sucks, but it is what it is. Fire the coaching staff as well even though I don't think Boughner is that bad...he's been here too long with this core as well. He isn't a coach you keep around for a rebuild. Firing Sommer goes without saying since he's a dinosaur.
2) The contracts...I tried to avoid dream world scenarios in terms of who they can move, where, and for what.
A. I think the Vlasic and Jones contracts are not movable given the performance/age/NMC/future potential factors, I would buy them out. Sorry Hasso, but if you're going to fork over a lot of money, this is part of the package.
B. You max out on value for Labanc, Meier, and Hertl. I really like Hertl, but he'll be in his early 30s by the time the team is ready to contend. I don't see Labanc and Meier as guys who will take 2-3 more years of full on suckage in a positive way...trade them even if it is kind of trading low. Hopefully we can land a couple 1st round picks and nice prospects there.
C. Next, I can't see Couture and Kane taking the rebuild well either, so they're gone too. I think there's a shot that Seattle might pick up one of them. Kane at 4yr x 7M left for a very solid 2nd line winger, and he'll be happy to go there since it's close to his home town in Vancouver. Couture would be a great 2C type leader with a strong playoff resume for an expansion franchise. I think Kane is the more likely option since he probably has 3-4 good years left. Finding a trade partner for Couture is tough, but maybe a playoff contender looking to use him as a top line scoring winger would do it if we take a bad contract back. How about Louie Eriksson + Ferland + 2nd round pick from Vancouver?
D. Burns and Karlsson: Burns would be easier to move value-wise as I think 4yr x 8M per is not a total disaster, but there would definitely be a bad deal coming back to San Jose. I would take a 2nd round pick + Radulov if the Stars would be open to that. With Pavelski coming off the books the following season, the Stars might be willing to do that. Karlsson is of course the hardest, and there would definitely be big time $$$ coming back. He'd definitely be interested in playing with Hedman, so maybe something around a second round pick, Tyler Johnson, and Gourde/Killorn coming back for Karlsson (25% retained)? Those two guys have 3-4 years left on their deals instead of 6. Karlsson could look great with Hedman on the top pair in Tampa. Another potential option would be Nashville if Karlsson wants to go there...we'd be taking back Ryan Johansen in that deal. Maybe Ekholm-Karlsson would be an effective pair there.
3) The new coach you would hire in place of Boughner would be a younger guy who would grow with the team as it grows...ie it's okay if he struggles for 2-3 years as the team tanks. Same thing goes for the new AHL bench boss.
So what does this all look like? A lot of money coming off the books with Hasso eating a good amount of $$ with the Jones and Vlasic buyouts (might be some $$ with retention in the trades too), and with prospects and 1st round picks coming back for our better assets and 2nd round picks for our shittier assets. If some of those guys don't mind staying around for a 3 year rebuild, it'd be great to keep them as well without taking on bad value in trades (although I highly doubt they will). The team would consist of tons of playing time for younger guys to see what they can do in big roles (Blichfeld, Chmelevski, Gregor, Balcers, Chekhovich) + some vets we pick up in the trades (Radulov next year, Johnson, Gourde/Killorn) and short-term FA vet signings. As they become more ready, Merkley, Bordealeau, Robins, Weisblatt, and Gushchin would get integrated. And of course the goal would be to have 3 consecutive lottery picks + maybe a few teams that we traded with falter and we luck into some more picks.
Sorry for the long ass post, but this is my overall idea. It would be 3 very dark years, but with the flat cap and prospects of this team, that's what I would do. /end