The IHL was originally an independent pro league that worked outside of the NHL "system". Back in the day the NHL had control over the player contracts in not only the NHL itself, but also the AHL and the QHL/EPHL/CPHL. When a player signed a contract he signed for an amount to be paid at the NHL level, an amount at the AHL level, and an amount at the QHL/EPHL/CPHL level. It was sort of like baseball's minor leagues; AHL was AAA, CPHL was AA/A.
As I said the IHL worked outside of that system. It was a place that players could go to still make a little bit of money playing the game but not having to play within the confines of the NHL's system. If you were a player who was traded to some team you didn't want to play for, or you were demoted to the CPHL and didn't want to play there, the IHL offered a place to play. It was sort of like the WHA in this respect, except at a much lower level.
Up until the '70s the IHL was pretty small-time, the equivalent of... something akin to the ECHL/CHL level, perhaps even lower than that (I'm thinking LNAH and the like). In the '70s the WHA challenged the NHL as a "major league", and WHA teams needed places for their minor-leaguers to play. When the various court cases that were filed in the early '70s blew up the old reserve clause system some of the AHL teams switched affiliations to WHA teams. The NHL teams still needed places for their minor-leaguers to play, so they started making affiliation agreements with IHL teams.
By the mid-'80s the IHL and AHL were pretty much exactly the same level, and NHL teams usually had an affiliate in one or the other league; rarely both.
The IHL was for most of its history a "midwestern" league, centered in the smaller cities of Michigan. Saginaw, Flint, Fort Wayne, etc. In 1984 they absorbed the Salt Lake Golden Eagles and Indianapolis Checkers of the Central League, and soon thereafter began expanding to bigger markets further west, many of which were served by WHA or NHL teams in the past: Denver in '87, Phoenix in '89, San Diego and Kansas City in '90.
Keep in mind this was a time when the AHL was very much a "northeastern" league; about the furthest west they went was Newmarket, Ontario. The IHL was moving into much bigger cities in the west and they were making quite a bit of money doing it. So they thought, "Hey, let's just keep expanding. There are lots of underserved hockey markets."
In 1990-91 the IHL had 11 teams. By 1995 they had 19, adding teams in Atlanta, Cincinnati, Las Vegas, Houston, St. Paul--all cities that had NHL or WHA teams in the past. In 1994 they started taking on the NHL directly, adding a team in Chicago and Salt Lake moving to Detroit. In '95 the San Diego Gulls moved to Long Beach, just down the road from the L.A. Kings.
They started luring young Europeans away from their homelands before the NHL did, like Sergei Samsonov. Miro Satan, Radek Bonk and Patrik Stefan. They started luring older NHL vets away from the AHL. Things were looking good, except the NHL teams started yanking their affiliation agreements.
It was all too much, too fast. By the end only a handful of IHL teams had NHL affiliations and the league collapsed under the weight of its newfound overhead. In 2001 the surviving teams merged with the AHL, leaving us the situation we have today.
