The club's licence is due to expire at the end of this season, and protracted negotiations between Football Federation Australia and Phoenix owners Welnix have yet to reach a settlement.
Fairfax Media reported today that meetings involving the FFA, Sutherland Shire Council, NRL club Cronulla and the Sutherland Shire Football Association had already been held aimed at establishing a new A-League club based in southern Sydney.
It says the Phoenix are seen as offering little for Australian player development, broadcast revenue and A-League attendances.
However, Phoenix general manager David Dome says there's no reason to believe the club will be dropped from the 10-team league in favour of a third Sydney team.
"The FFA see the Phoenix as being one of the 10 teams in the A-League next year - they've always said that," Dome told NZ Newswire.
He said club chairman Rob Morrison is continuing discussions with the FFA, but there's no indication of how close a resolution might be.
"It's a fluid situation - Rob Morrison's working very hard on a proposal but there's no firm timeline."
Morrison, who is in London, was unavailable for comment.
The FFA last year extended the length of the licences of the nine Australia-based clubs until 2034.
A-League head Damien de Bohun has said there are no plans in the foreseeable future to expand the 10-team league, with the focus on sustainability and stability rather than expansion.
