Australian soccer's governing body must postpone any expansion plans and look at cutting players salaries in order to put its struggling domestic league on a firm financial footing, a government report issued on Thursday said.
The report, conducted by Australian Sports Commission Chairman Warwick Smith, was instigated by Australia's federal government in April to determine the viability of the sport in the country before it hosted the 2105 Asian Cup.
Australia's A-League, re-launched in 2005 after a similar government review, has been beset by financial problems and Football Federation Australia (FFA) was forced to bail out several clubs, while others have had enforced ownership changes.
The league has also suffered from a steady decline in crowd and television viewing figures over the past three seasons and rejigged its schedule this season so its conclusion did not clash with the start of the rugby league and Australian rules competitions in March.
"The A-League is still in its infancy and is the greatest financial pressure for FFA," the report said. "It is a high-cost enterprise with the establishment phase presenting financial challenges to FFA and club owners.
"Revenues do not match costs (and) the clubs incurred aggregate losses of more than $20 million in 2009/10.
"Financial pressures have seen the exit of one team and other teams change hands, with FFA responsible for providing financial support through the transition."
The FFA posted a loss of A$891,000 ($910,000) earlier this week because of financial bailouts and Chairman Frank Lowy said that, the clubs would need to eventually stand on their own two feet.
Smith, who also studied the growth of Japan's J-League and Major League Soccer in the United States, recommended the FFA postpone any expansion plans beyond its current 10 clubs until it had consolidated and was able to support itself financially.
Any expansion should come only in areas where there is strong community support.
"The competition is still in its relative infancy and has not matured to the point that it could survive if separated from FFA," it said.
The report found about 40 percent of the A-League's revenue was spent on players' salaries (about A$32 million), in contrast to other sports like cricket, rugby and rugby league, where player salaries were about 20 percent of revenue.
It recommended the league look at reducing the player salary cap and abolishing the minimum wage in order to reduce costs, while it also suggested owners have a greater say in the strategic direction of the league given the amount of money they pumped into the clubs.
It also recommended the FFA rein in its own spending.
"It is in both FFA's and owners' interests to see the A-League flourish," the report said.
"A-League club owners are significant investors in the game, between them absorbing annual losses in the order of A$20-25 million and warrant being provided with a real opportunity to contribute to the strategic direction of the competition."