THE Tasmanian Government has admitted defeat in its bid to win the licence for the AFL's 18th team.

After meeting with league commission chief Mike Fitzpatrick on Thursday, bid leader and Tasmanian Minister for Economic Development Paula Wriedt said the AFL had made up its mind on admitting the Gold Coast and Western Sydney as the 17th and 18th teams.

But Tasmania's audacious bid to host an AFL team is not dead.

Instead, the State Government has turned its focus towards attracting a Melbourne team to relocate or filling a vacancy arising from a team folding or merging.

"What we are saying to the commission is, 'This isn't about us necessarily knocking off Western Sydney or the Gold Coast'." Wriedt said. "This is us saying, 'Whatever happens in the future, we are here and if the business case stacks up … we are ready'."

Wriedt said the recent loss of sponsors by clubs such as the Western Bulldogs, Richmond and St Kilda left the door ajar for a Tasmanian team.

"If you look at developments just within the past week of teams losing major sponsors, it really says that it is becoming really difficult in Victoria to sustain a club," she said.

"I think everyone associated with football acknowledges that there is going to be some changes over time … we want to be in the space that whatever happens, we are the next people considered."

Wriedt was open-minded about whether a Tasmanian team was relocated from Melbourne or was a new entity. But she said the Government was not interested in another co-location agreement — such as the one with Hawthorn — while the deal with the Hawks was still running.

The Government is proceeding with the proposal being prepared by sports consultants Gemba and to be presented to the AFL in October. It will also make the information about the strength of support for a Tasmanian team available to Melbourne clubs.

The Tasmanian Government will now focus on convincing the AFL Commission to declare the state ready to host a team and assign it official status as next in line for an AFL franchise.

Wriedt said that if the bid proposal showed a Tasmanian team was workable, the AFL should put up financial incentives for a Melbourne team to relocate there.

"Given how deep the AFL is prepared to dig into their pockets for these other two bids, where money seems no object, I would've thought that if they do believe we have a case, they would enter into discussions about how they can assist financially," she said.

Wriedt said the bid team's intention had never been to supplant Western Sydney or the Gold Coast but few doubt that the bid had focused on winning a place in an 18-team league.

She had not put a timetable on when she wanted to have a new or relocated Tasmanian team in place but thought it could happen in the short term.

"The reality is, particularly with developments this week in relation to sponsorships being lost, that it wouldn't be such a long wait," she said.

She said a major sponsor for the non-existent team, as well as a second-tier sponsor, would be announced soon, probably next week. She admits it sounds strange but adds: "My glass is always half-full. If every team was in a strong financial position and there weren't talks about potential mergers and sponsorships falling over … the reality of the situation now, as opposed to five years ago, means there is light on the horizon."

Wriedt said she was disappointed by the AFL's negativity towards the bid early in the process but detected a greater willingness to listen in recent weeks.

But she was proud the bid had generated massive momentum and won "hearts and minds" in Tasmania and Victoria.