Goals Soccer and Powerleague in preliminary talks

Goals Soccer Centres said it was in early-stage talks with five-a-side rival Powerleague, but this was "but one of the strategic opportunities currently being assessed".

AIM-listed Goals made the announcement after speculation in the press that the two five-a-side football operators were mulling a merger.

Goals said "no commercial or financial terms have been agreed and no decision on any course of action has been made by the board" and stressed that management were "highly focused" on delivering the strategic plan announced last June.

Powerleague was listed on AIM until 2009 when it was taken private by private equity group Patron Capital for £42m.

A combined business would have a UK portfolio of around 100 football centres in the UK, with 46 from Goals and 47 from Powerleague, plus Powerleague's PowerPlay budget operations, with analysts estimating a resulting saving of close to £4m from removing one head office function.

A small international operation would be formed of Goals' two centres and two in the pipeline in Los Angeles, while Powerleague has one centre in Holland and one in Dublin.

Over the weekend, Sky News reported the deal would be formed as a merger rather than an acquisition, with Powerleague's private equity owners having been open to offers for some time.

Analysts at Canaccord said Goals did not have the capital to buy the business and "we detect little appetite for another rights-issue following the one last year" and said an elegant solution may be to agree to an all-share merger which gives Patron a longer-term exit route.

A merger would "undoubtedly" attract scrutiny from the Competition & Markets Authority, the broker said, with any decision hinging on the definition of 'market', with a potential problem if a narrow definition such as 'football in a cage' is adopted.

"Using a tight definition, Goals Soccer and Powerleague would control circa 60% of the market. They already have an oligopoly position but Goals' recent financial track record suggests a broader definition (including all 3G artificial pitches) is more relevant as there are no signs of abuse of pricing power due to the intense competition from new budget operators (Champion Soccer, Football Mundial, Pitch Invasion, Playfootball, Prostar Leagues etc), exploiting the proliferation of FA inspired 3G pitches."