Rugby Australia will fight fire with fire with the Melbourne Rebels and say they will not back down from doing “what is in the best interests of the game nationally” after being sued by the now-defunct Super Rugby franchise.
A little more than 24 hours after the Rebels lodged their statement of claim in the Federal Court of Australia in Melbourne to sue RA, the governing body slammed the franchise’s former directors for trying to shift the blame following their sorry demise.
It comes after the Rebels slipped into voluntary administration in late January, before they were shut down on May 30 after it was found they had accrued $23m in debt, including $11.5m to the Australian Taxation Office, and may have been trading insolvent since 2018.
Rugby Australia CEO Phil Waugh and Rugby Australia Chair Daniel Herbert address the media in Melbourne following their decision not to give the Rebels back their Super Rugby license. (Photo by Morgan Hancock/Getty Images)
In lodging their legal action on Wednesday, the Rebels’ directors are seeking damages of up to $30 million.
The Melbourne Rebels Rugby Union is also seeking control of their licence so they can return to the Super Rugby men’s and women’s competitions.
In addition, they want the Federal Court to allow RA’s books to be open so it can be investigated “whether (and the extent to which) there has been fiduciary and governance failures by Rugby Australia.”
In a statement provided to The Roar on Wednesday, the Rebels claim the governing body was “aware of the financial situation of the Rebels at all times”.
The Rebels also claim that rival Super Rugby franchises such as the Waratahs and Brumbies received preferential treatment over them.
“Rugby Australia did secure an $80m loan facility but they chose only to provide funding, indemnities or other financial support to the NSW Waratahs and subsequently the ACT Brumbies in preference to the Melbourne Rebels,” the statement read.
Rebels players prepare for their final Super Rugby match after losing to the Hurricanes at Sky Stadium, on June 08, 2024, in Wellington. (Photo by Hagen Hopkins/Getty Images)
On Thursday afternoon, RA said they were “disappointed” by the “inaccurate and misleading comments in the media and rejects the MRRU directors’ ambit claims and attempts to shift blame for their financial mismanagement.”
The governing body maintains they fulfilled their contractual obligations and is preparing to counterclaim against the MRRU and its directors or their mismanagement since 2018.
The governing body added: “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.”
In the midst of their next broadcast negotiations, the timing of the lawsuit is the latest setback for the governing body after bouncing from one crisis to the next since RA culled the Western Force in 2017.
RA are hoping for an uplift from the $29m they currently receives annually from Nine Entertainment.
But with the latest crisis once again putting rugby union back into the headlines for the wrong reasons, and Joe Schmidt holding a 4-5 win-loss record on the eve of a difficult grand slam Spring Tour, it’s unlikely RA will be able to attract the competitive tension necessary to see an uplift in its next broadcast deal which will start in 2026.
Full Rugby Australia statement
Rugby Australia is disappointed by the Melbourne Rebels Rugby Union Pty Ltd’s inaccurate and misleading comments in the media and rejects the MRRU directors’ ambit claims and attempts to shift blame for their financial mismanagement.
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.
