A-League hopefuls Southern Expansion are offering to pay a seven-figure sum to Sydney FC as compensation for encroaching on their territory and threatening the Sky Blues' core membership base in the city's south.

Should the Sutherland Shire-based bid gain entry into the competition, they will propose paying a $1 million "structural adjustment package" to rivals Sydney FC, who have staunchly opposed the inclusion of the group as part of A-League expansion.

Chris Gardiner, CEO of the Southern Expansion consortium, and bid chairman Morris Iemma. Credit:Peter Braig

Southern Expansion chairman Morris Iemma said his team was seeking to address Sydney FC's concerns that a new team would cannibalise the football market by offering the club a significant cash payment to cover any potential loss of Sky Blues supporters to the new side.

Iemma said the offer of a one-off cash deposit to Sydney FC had been included as part of the Southern Expansion bid proposal to the FFA and Deloitte and suggested Southern Expansion were disappointed not to have received any response from the Sky Blues.