The refusal from Football Federation Australia to extend the Wellington Phoenix's A-League licence could be the beginning of the end for the club.

Football Federation Australia has declined the Phoenix's request for a 10-year licence extesion, saying the club doesn't meet the requirements they see as fundamental to the future growth of the competition.

The club's current licence expires after this season with the FFA saying the most they're willing to offer is a four-year deal.

The Welnix Group, which owns the club, has already stated a five-year extension was too short.

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Former Phoenix striker Paul Ifill said it's obvious what they're doing.

"A four year license is nothing. It gives you nothing, I'd imagine it will be four years and then thanks very much and off you go, so it's probably prudent to not take the four years and push for 10."

"I'm bitterly disappointed, I think it's very poor from the FFA."

Fox Sports commentator Simon Hill says they need to fight because they're effectively on life support.

"I would fight for my club, if only four years is on the table, I would take that and say that we're going to show you just what we can offer."

"I just hope the Wellington Phoenix survive, I'm a very big supporter of them. I love the club, they've got a great bunch of fans, good owners, don't let it go to waste."

The Phoenix say they'll respond to the FFA's decision in due course.

If Wellington were to leave, it would present an opportunity for a 10th Australian team to enter the league as a replacement and fuels reports of a potential new franchise in southern Sydney.

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Shaping as favourites are the Sutherland Shire or St George areas, both of which have big local talent pools and are seen as regions which could quickly gain traction with fans.

A NSW South Coast club may also be an option, with National Premier Leagues NSW side the Wollongong Wolves known to have A-League ambitions, while there have been suggestions a joint southern Sydney-Illawarra venture could create a viable new fan base.

The ACT's governing body Capital Football has also lobbied for a Canberra team to join the fray.

Last week Sydney FC coach Graham Arnold was sceptical about the possibility of five NSW-based sides in a 10-team competition, saying it was simply too many for a national league.

Should a third Sydney team joined the Sky Blues and the Western Sydney Wanderers, it would mean an increase in derby fixtures from three to nine each season.

"I know that derbies are special but how many derbies can you have? Maybe Brisbane needs one, maybe Adelaide could do with one," Arnold said.

"Do we need another one? We've already got four teams in NSW. A fifth will maybe make one too many."

Meanwhile, the FFA may have been left red faced by the television ratings for one of its main derbies.

The first Sydney derby of the new A-League season between Sydney FC and the Western Sydney Wanderers attracted only 80,000 viewers to Fox Sport.

It's well short of the 188,000 who watched the same fixture last year.