Expanding the A-League by two teams under the current ownership model would be totally unsustainable and result in huge financial losses, Football Federation Australia have warned.
The warning came as the FFA announced that they will begin detailed work with A-League and W-League clubs this week to develop a new ownership and operating model for both leagues.
FFA Chairman Steven Lowy and chief executive David Gallop met with A-League club chairmen to discuss the issue on February 14 and they will all meet again on Thursday.
FFA said that an analysis of the sport's current financial standing after finalising a six-year, $57 million per year TV deal revealed that expansion of the A-League and W-League, or any rapid growth in the game generally "will require significantly more capital investment".
The financial analysis was done with the free-to-air component of the broadcast deal still yet to finalised.
FFA also reaffirmed their position that expansion would not take place before the 2018-2019 season.
The governing body argued that having to account for two new A-League teams in their distribution of club grants would result in losses over six years.
"The FFA’s analysis found that expanding the A-League by two teams under the current model would result in net losses over the next six years," the statement said.
"This is because grant distributions to the new clubs, and the increase in costs to FFA for operational matters such as transport would be greater than the additional revenue the clubs would generate through broadcast arrangements and sponsorships.
"As the FFA is a not-for-profit organisation that redistributes all of its income into the clubs and other parts of the game, such losses are not sustainable."
Expansion criteria was set to be released by the FFA imminently but Gallop said it will now be months before the criteria is finalised as he stressed the importance of keeping the 10 current A-League licences viable.
“We recently advised the clubs that we must explore a new model for the A-League/W-League. We agree that we need to protect the value of the existing licences in which the current owners have invested,” Gallop said in a statement.
“We want to expand the leagues but this has to happen as part of a new structure. That’s why we are now working with the clubs to determine the future structure of the leagues and the criteria for expansion.
“We will examine these issues in detail and expect this work will take months rather than weeks. We know that those consortia that have expressed an interest in joining the league would want to be part of something that is financially sustainable and attractive as a sound investment.”
FFA said they were engaging a corporate advisory firm to assist with developing models for a new structure and to provide advice on the financial aspects of the expansion process.
“The decisions we make around the future of the A-League/W-League will have an impact on every aspect of football in Australia,” said Gallop.
“That’s why we want to work with the clubs and other stakeholders on changes that benefit the whole game.”
Gallop said FFA would provide updates on the process over the months ahead. While it was too soon to predict when expansion might occur, it would not happen before the 2018-2019 season.
There are as many as 10 proposed bids for new licences, including Tasmania, Geelong, Brisbane, South Melbourne, Dandenong-Casey and Wollongong Wolves.