Rugby Australia has issued a stinging response to the Melbourne Rebels directors who have launched a claim in Federal Court seeking $35m in funds and the franchise's immediate return to Super Rugby Pacific, with the governing body revealing it was compiling a counter claim of its own.
Australian rugby was rocked by the Rebels' directors move on Wednesday, after RA had earlier this year decided it would not reissue the club's license to a private consortium, given the organisation had effectively been wound up at the end of this year's Super season and its players moved on to other Australian franchises or having taken offers overseas.
But the saga has now taken a fresh turn, with RA on Thursday issuing a statement that revealed its own plans for legal action and once again detailed its belief that it had not only fulfilled its obligations to the Rebels, but also accused the club's directors of "misleading conduct" when it came to organisation's financial position.
Administrators had previously uncovered that the Rebels had traded insolvent since the end of 2018.
"Rugby Australia is disappointed by the Melbourne Rebels Rugby Union Pty Ltd's [MRRU] inaccurate and misleading comments in the media and rejects the MRRU directors' ambit claims and attempts to shift blame for their financial mismanagement," an RA statement read.
"RA reiterates that it has complied with all its contractual obligations to MRRU.
"RA is preparing a counterclaim against MRRU and its directors for misleading and deceptive conduct concerning the financial position of MRRU dating back to 2018. Based on that misleading and deceptive conduct, RA granted MRRU a participation licence for the Super Rugby competition and provided associated funding and payments to MRRU.
"Had RA not been misled or deceived, it would not have provided MRRU with a participation licence and thus not lost in excess of $35 million that was paid to MRRU since at least 1 July 2018.
"RA believes that the MRRU directors were knowingly concerned in and/or aided and abetted MRRU's misleading and deceptive conduct.
"Given the insolvency of MRRU, its directors placed it into voluntary administration on January 29, 2024.
"The Administrator reported that MRRU had accumulated almost $23 million in debt prior to entering voluntary administration and noted that MRRU's directors may have traded while insolvent from 31 December 2018, which is a breach of the Corporations Act.
"The Administrator also stated that the reasons for the company's financial challenges were a history of trading losses, lack of readily available alternative funding sources, an excessive cost structure compared to the underlying revenue base, and insufficient revenue generated from non-RA sources including membership, sponsorship and game day receipts.
"RA was notified by the Administrator that the directors of MRRU had received ATO Director Penalty Notices. RA received a garnishee order from the ATO in December 2023. MRRU never informed RA of the Director Penalty Notices.
"After MRRU was placed into administration, RA stepped in to fund all operations of the Melbourne Rebels in 2024, paying player and staff wages, and meeting all associated statutory obligations connected with those payments for the entirety of the 2024 Super Rugby Pacific season.
"As the national governing body, RA will continue to do what is in the best interests of the game nationally and remains focussed on protecting and promoting rugby across Australia."
RA along with its New Zealand Rugby counterparts had only last week revealed the draw for the new 11-team Super Rugby Pacific competition that kicks off in February next year.
RA rejected the private consortium's bid, which involved relocating the Rebels to Tarneit in Melbourne's western suburbs, on the basis that it lacked sufficient detail and did not "demonstrate sufficient financial viability".
The decision sparked emotional scenes a few weeks later when the Rebels played their final Super Rugby game against the Hurricanes, which ironically was the first time the franchise had ever reached the finals.
The ongoing saga threatens to further affect RA's already fraught financial position, with the governing body having already drawn down more than half of an $80m debt facility it secured last year.
The financial injection was supposed to see the game through to next year's British & Irish Lions series, which could inject as much as $100m into the game in Australia; the 2027 Rugby World Cup will also help to improve the code's financial position thereafter.
While the governing body believes it is in a strong legal position when it comes to the Rebels, the directors' attempt to regain what it says were millions of dollars the club was promised by RA will only place further stress on the game in Australia, both on and off the field.