Football Federation Australia CEO David Gallop confirmed he held a meeting on Friday with Phoenix chairman Rob Morrison and Gino Marra, the head of the South West Sydney FC expansion bid.

News Corp Australia reports a memorandum of understanding has been signed between the two parties.

While requiring approval from FFA to move forward, under the hybrid model, the team's training base would shift to Sydney's southwest with some home games moved to Campbelltown Stadium.

The team would play in black and white, but would revert to the yellow and black Phoenix strip for matches at Westpac Stadium in Wellington.

It's believed FFA looks dimly at the prospect of a merger, particularly one splitting the club's supporter base on opposite sides of the Tasman.

"The proposal, which would obviously require FFA approval, needs to be considered in the context of the commercial objectives around the expansion of the league which are to ensure that the investments made are ones that benefit the new clubs, the A-League as a whole, its current club owners and the broader game," Gallop said in a statement released to AAP.

The report claims the prospect of a 50 per cent sale hinges on two legal factors: whether Wellington's licence is territorial, and if a sale of 50 per cent or below can be blocked by FFA.

It follows weeks of rumours about the future of the Wellington club, whose A-League licence expires at the end of season 2019-20.

With no hope of reaching the 'metrics' required to trigger an extension, as per the agreement signed two years ago with FFA, a sale would allow Phoenix owners to at least pocket some money before the club is shuttered.

It would also ensure the South West Sydney FC bid wouldn't have to pay an expansion fee, which could be as high as $10 million, as part of the formal process being run by FFA.

Two new teams are due to join the A-League next year.

However, Morrison has refuted claims in recent weeks that he wants to sell the club.

"We'd be silly not to talk to people but that doesn't mean we're selling," he said last month.

Comment is being sought from the Phoenix, but the club tweeted in response to the initial News Corp story: "The club once again will refuse to speculate on speculation."

Australian Associated Press