Rugby Australia (RA) advises that the application from a Consortium seeking a Participation Agreement for the Melbourne Rebels to participate in the 2025 Super Rugby Pacific competition has been unsuccessful.
RA advised the known representatives of the Consortium of this outcome this morning, noting that the application did not demonstrate sufficient financial viability.
The application relied upon projections for revenue growth and cost savings that RA believes are overly optimistic, raising significant doubts about the long-term sustainability of the proposed licensee. Further, the Consortium’s proposed alliance with Western Melbourne Group (WMG) regarding co-location at Tarneit, which is central to the proposed model, is early stage and is not yet agreed between the parties.
The Consortium has made it clear that it is seeking a contribution from RA of several million dollars to cover forecast operating losses – this is in addition to the standard funding that would be available under a Participation Agreement.
The identity of the Consortium members has not been disclosed to RA and, as a result the credentials of the Consortium were unable to be fully assessed.
However, it is clear that key advisers to the Consortium include one or more former directors of Melbourne Rebels Rugby Union Pty Ltd (MRRU), meaning that an individual or individuals involved were responsible for the governance of MRRU during the period in which the Administrator considers the company may have traded while insolvent.
Since the Rebels’ inaugural year in 2011, MRRU has not been independently financially sustainable despite significant additional investment by RA over and above committed club grants. There is nothing in the Consortium’s proposal which demonstrates with sufficient certainty that this will change.
The Consortium has claimed to have committed $18m in funding, though no documentary evidence has been provided to support this. RA has been asked to rely on a verbal assurance, as well as confirmation that a portion of the committed funding will be contributed towards funding the Deed of Company Arrangement (DOCA).
No material has been provided outlining the new ownership structure, the new delivery model across two locations (AAMI Park and Tarneit) or how the historic financial challenges faced by MRRU would be mitigated under the new model.
RA does not take this decision lightly, however it must act in the best interests of the game and its stakeholders, and to provide certainty for the Rebels’ players and staff, and all Super Rugby clubs in planning for the 2025 Super Rugby Pacific season.
Given the lack of detail made available to RA, the lack of transparency and the significant doubts over the Consortium’s proposed financial model, RA has determined that there is an unacceptable level of risk associated with entering into a Participation Agreement with this Consortium for the 2025 Super Rugby Pacific season.
Regarding the Melbourne Rebels players, RA and the Rugby Union Players Association (RUPA) have been contingency planning for the possibility of this outcome and met with players last week to discuss options for player movement within Australian Rugby.
This process will continue in the coming weeks, as RA engages with RUPA, players and other Super Rugby clubs regarding options for player movement. RA will communicate further details regarding this process in due course.
Commitment to Victorian Rugby
This is a decision solely regarding the participation of a men’s professional Rugby team in Melbourne that has not demonstrated financial sustainability, and which requires substantial ongoing additional financial support. RA remains deeply committed to Rugby in Victoria and will continue to invest in the game, working with Rugby Victoria, State and Federal Government and other stakeholders to grow the game.
Further:
• RA is currently working through the appropriate footprint for the 2025 Super Rugby Women’s competition – a decision on the Rebels Super Rugby Women’s team will be made as part of this broader process later this year;
• RA will continue to fund Rugby Victoria to oversee community Rugby and grow the game within the state, and will look at opportunities to increase funding;
• RA will assume strategic and financial responsibility for junior talent development programs working closely with Rugby Victoria under a centralised high-performance structure – including Super Rugby U16s and U19s;
• RA will continue to work with the Victorian Government on development of the Victorian Rugby Centre of Excellence at La Trobe University, which promises to become one of the nation’s landmark development facilities and the home of Rugby pathways in Victoria;
• RA is evaluating options to feed Victoria’s elite men’s pathways into Australian
Super Rugby clubs – a path previously trodden by 2023 John Eales Medallist Rob Valetini when he was signed by the Brumbies as a Melbourne schoolboy.
MRRU Voluntary Administration
The Administrator reported that MRRU had accumulated almost $23 million in debt prior to entering Voluntary Administration (VA) in January this year. RA were not advised by the directors of MRRU that they had been issued with ATO Director Penalty Notices – RA was only made aware of these notices when the Administrator communicated them.
The Administrator also noted that MRRU may have traded while insolvent from 31 December 2018.
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.
Following MRRU being placed in 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 season.
RA CEO Phil Waugh:
“It has been a testament to the players, coaches, team management and support staff that they have managed to deliver such a competitive season on the field in extremely difficult circumstances – and we are looking forward to seeing the team fighting in the Finals for the first time ever.
"I want to thank the Rugby community for its patience and ongoing support of the code. Rugby Australia's focus right now is on supporting the impacted staff and players at the Rebels.
“We have a plan that will ensure Rugby has a strong future in Victoria – the infrastructure and the systems remain unchanged despite the change to the professional game in 2025, and we will continue to look for opportunities to increase that investment in the game in Victoria.
“As Australian Rugby evolves, we will consider the game’s professional footprint, and how it best serves the game and Super Rugby.
“We will continue to work closely with the Victorian Government and Visit Victoria on major events for the future, and we are looking forward to the Wallabies taking on Wales at AAMI Park this July.
“RA is evaluating possibilities for the tour game for the 2025 British & Irish Lions Tour scheduled for Marvel Stadium on 22 July 2025 and is working with the Lions on the successful delivery of that event."
