A national second division would serve as an "incubator" for future expansion teams and could potentially include reserves sides from bigger A-League clubs, according to a document that is set to be tabled to the Football Federation Australia board.

The Herald has obtained a copy of the 40-page 'white paper' written by FFA, in conjunction with the Australian Association of Football Clubs (AAFC) and Professional Footballers Australia (PFA), which has been borne out of the National Second Division Working Group's recent meetings.

FFA director Remo Nogarotto (right) is chair of the National Second Division Working Group. Dominic Bossi

It recommends the formation of a second division in time for the 2021-22 season, comprising between eight to 12 clubs - with a focus on key markets not currently serviced by the A-League - and operated by FFA in the initial period.

The document, which is marked as a draft and is understood to be for discussion purposes only at this stage, is by no means a final blueprint and many details remain scarce or unresolved. For instance, whether the second division's season would take place in the winter or summer is subject to further discussions amongst stakeholders.

Nor does the paper prescribe a financial model for the second division, which remains one of the major sticking points between the AAFC and the PFA, whose independent modelling has yielded starkly contrasting figures. The AAFC believes each club could operate on an annual budget of $2.5 million, while the PFA believes $5.36m would be required to cover costs each year.

However, the document is intended to serve as a platform upon which these issues, and others, can be reconciled in accordance with the ultimate "financial parameters" of the new competition.

"FFA has also completed high level analysis on a cost basis for a national second division ... (and) is of the view that the commercial model should be aligned with the principle of being financially sustainable," it says. "As such, a cost structure should reflect the amount of revenues that are likely to be achieved by the NSD."

As for promotion and relegation, the paper describes it as "arguably the most vexed question" in the game but also the ultimate objective of any second division.

"To purists it is the holy grail of football ... counterbalancing this system of meritocracy however are the twin realities of challenging economics and the existing licensing framework which (A-League) Clubs are operating under, and which has guaranteed participants a closed model at the highest level of Club competition in this country," it says.

Second-tier competition models for other codes including the AFL, NRL and National Rugby Championship are considered and examined by the document, as well as lower-tier football leagues in countries such as Japan, the United States and the Netherlands.

It proposes an "runway" phase of between two and five years at the start of the second division during which clubs could prepare for possible consideration in becoming the next A-League expansion team, as the top tier grows from 12 to 14 or possibly 16 franchises.

Lessons learned: The National Rugby Championship is one of several second-tier competitions the white paper reefers to as an example for Australian soccer. Matt King

A mix of existing NPL teams and new entities is anticipated for the second division. Failed A-League expansion bids such as Team 11, South Melbourne, Canberra and Wollongong would be viewed favourably, with an aim for all clubs to average attendances of at least 3000 by year three.

Foreign players would be capped at two for each team, while feeder relationships with A-League sides are proposed, as well as the possible future admission of A-League reserves teams.

"Consideration ... needs to be given to the uniqueness of the Australian sporting landscape and the need to not just reflect but indeed continue to nourish the national footprint of our game, which is its great comparative advantage to the other football codes," the paper says.

"Accordingly it is key that large metropolitan markets are activated as well as (potentially) strategically important teams such as reserve teams from the larger HAL clubs (as per the Dutch model)."

Pro-rel with the 'third tier' NPL system would be introduced in year five, and with the A-League at some point after that. However, the document says simply winning the second division should not necessarily lead to automatic promotion to the A-League, and that other "non-football criteria" would need to be discussed, determined and ultimately met by any clubs which go up.

FFA believes it is best placed to run the second division and will sound out Fox Sports to ascertain if they have an appetite to broadcast matches. With no TV revenue likely in the initial years, the paper suggests a revenue/cost share broadcast model would be required, much like what Super Netball and the NBL has in place, in combination with online streaming.

It is recommended that a centralised approach is taken towards sponsorship, given the competitive nature of the Australian sporting market, with a singular apparel sponsor - like Reebok in the early days of the A-League - likely to cover all second division teams.

There is also the possibility that government money could be secured to help partially underwrite the competition - not only for individual clubs, but the central operating costs of the league, as well as the potential that funds for broadcasting “community and niche sports” could be unlocked.