Rugby Australia’s secret dealings with the Melbourne Rebels could be laid bare after a senate inquiry called on Australia’s corporate watchdog to investigate the rugby governing body.
The senate hearing wants the Australian Securities and Investments Commission to investigate deals done between RA (formerly the ARU) and the Melbourne Rebels that ultimately led to the dire financial position of Australian rugby and the axing of the Western Force.
In addition, it wants ASIC to investigate RA’s annual reports.
The senate inquiry also said that the decision to axe the Force was a “foregone conclusion” that was probably made on April 9, 2017 – four months before the franchise was officially culled.
The inquiry, which was launched in the wake of the Force’s axing, was concerned about the manner in which the ARU sold the Melbourne Rebels licence to Andrew Cox’s Imperium Group in 2015.
It heard evidence that the licence was transferred to the Imperium Group debt free, meaning the ARU forgave $13 million in loans to the Rebels, as well as paying off other debts.
It also heard evidence that the ARU agreed to pay the Melbourne Rebels an additional $5.5 million between 2016 and 2020.
The inquiry described it as a “poor process” and a deal that “provided virtually no benefit to the ARU and disadvantaged the other members of the ARU who could not benefit from the additional funding that was provided to the Melbourne Rebels.”
“The committee was very concerned by the seemingly generous terms the ARU negotiated to transfer the licence,” the report said.
“The committee cannot understand the basis on which substantial additional funding was provided and why no conditions were placed on the use of the funds.”
Because the Rebels were privately owned by Cox, the ARU would have faced serious legal ramifications if they had tried to axe the franchise.
And when Cox transferred the licence to the Victorian Rugby Union for $1 in early August, it made it impossible for RA to axe the franchise.
But because Rugby Australia owned the Force after forming an ‘Alliance’ agreement with them in June 2016, the Perth-based side could be axed without legal ramifications.
RA claims it was in negotiations with the Rebels about buying back the licence up until August 2017.
But evidence tabled to the senate hearing suggested the ARU actually helped Cox transfer the licence to the VRU in order to ensure the Rebels survived.
The senate report said the ARU appeared to have considered the possibility of removing a team from the Super Rugby competition as early as August 2016.
“… and it seems likely that the option to remove an Australian Super Rugby team was being actively considered by ARU management at the same time that the Alliance Agreement was being negotiated with the Western Force,” the report said.
RA claimed it would have gone bankrupt by 2019 if it didn’t axe one Australian franchise.
WA Liberal senator Linda Reynolds, who launched the senate inquiry, was damning of the ARU.
“These captains of industry who are the custodians of this great sport have driven it to the brink of financial insolvency,” senator Reynolds told parliament.
KEY RECOMMENDATIONS
*That ASIC reviews the evidence received by the committee regarding transactions involving the Melbourne Rebels.
*That ASIC reviews the financial circumstances reported in RA’s annual reports against the evidence presented to the committee.
*That the Australian Sports Commission consider an additional principle to be introduced in the Commission’s Sports Governance Principles in relation to National Sporting Organisations’ commitment and duty to player welfare
*That RA immediately transfer all intellectual property and trademarks associated with the Western Force to RugbyWA.
jack
Roar Rookie
TWAS you said "As for the Cox agreement. That was the price for Cox to “purchase” the risk from the ARU" but you are yet to answer my question re why did they sell to Cox when Winney was ready to cauterise the ARU money pit payments to the Rebels as at Dec 2014?? You still refer to exit clauses and debt levels, but you refuse to answer the question. Now you say that the support for the Rebels was the price for Cox to purchase the risk - WHAT RISK? HE DIDN"T PUT ANY HURT MONEY INTO IT - THERE WAS NO RISK TO HIM - DO YOU GET IT?
jack
Roar Rookie
TWAS, you state that: Neither Gary Gray nor his son are on the ARU board. What is your point? Actually, Gary Gray was on the MRRU Board (and for good measure, so was Rob Clarke until 1 May 20015) and he introduced Cox to Clarke and then they both pushed for the deal to sell the Rebels to Cox for $1 and the ARU to pay Cox $6 m in extra payments.
Josh
Roar Rookie
Didn't the ARU only have an obligation to field 5 teams until the end of the 2015 season which was nearly over at the time of the sale? It would have been cheaper to go into the new broadcast deal with only 4 teams and cut the Rebels while they owned them. Future liabilities would have been offloaded for $6M less.
Timbo (L)
Roar Guru
Ho do you think removing a states Ruby franchise and then destroying it's governing body looks. Scorched earth! Not sure who has the Stadium liability with the WA government. But if the ARU has both entities, they will own the damage.
Timbo (L)
Roar Guru
The Force weren't suing anybody for money. They were demanding that their contract be recognized in the spirit of it was negotiated under. There would be no loss, merge or "Exit" another team.
Timbo (L)
Roar Guru
So everyone knew in advance that the team was a loser....... I am not arguing or complaining about this point. It is good actuarial practice. But the emphasis is that the team was and until the forced relocation of the Western Force to Melbourne, a loser. And everybody know it.
Timbo (L)
Roar Guru
If you look carefully, WA is in TWAS as well *Chuckle
Timbo (L)
Roar Guru
Yet Let's see what ASIC can dig up without the burden of contract confidentiality,
piru
Roar Rookie
The Western Force no longer exists - and to the extent it did it was owned by the ARU - surely that comes with the liabilities? It seems RugbyWA owes for NIB though, which I find odd - surely that would be one of the Force's liabilities that were assumed?
Timbo (L)
Roar Guru
Riiiiiight. The Rebels survive lurching from bailout to bailout. Vic Gov will be the next ones to take the loss. Viable or not, the ARU don't care as long as they aren't on the hook for it.
Timbo (L)
Roar Guru
TWAS Are you saying Former ARU Chief Operating Officer Rob Clark was not a member of the board? Even if by some bizarre corporate governance/voting trickery he isn't a board member he sure as eggs was part of the contract negotiations. It is in his his title. Get a grip and stop deflecting arguments with irreverent information. It doesn't matter how you polish it, He was there and key member responsible for the decisions. If he had fingers in the till, it will still be his head on a pike whether he had a board seat or not.
Train Without A Station
Roar Guru
Yep. So now we go on to selection. Who you can legally cut is surely the biggest factor to start with. Then of course there are other considerations (TV market value, Wallaby test value, the franchises themselves, etc.).
ForceFan
Guest
TWAS there is no doubt that you have become the Don Quixote of Rugby blogs. Your jousting at windmills has become tiresome to the extreme as you just seem unable to acknowledge what's already in the public domain. You constantly act as if you're in a knowledgeable position but continue to present assumptions as fact. Your seemingly broad level of knowledge and experience belies your relatively few adult years. The EARU advised that they had provided $28 Million of ADDITIONAL funds to Super Rugby clubs in bailing them out. ADDITIONAL as it was EXTRA to the normal funding and grants. That's not just what I have said - it's what the ARU has said. They have NEVER provided a definitive breakdown of these costs and wouldn't during the Senate Inquiry. What did come out of the Inquiry was that about $15M (over 50%) of these additional funds went to the Rebels. About $5M went to the Western Force (covering the IP and Operating Licence). Of the remainder it appears the bulk went to the Reds. There had been no previous "bailout" funds directed towards the WF (but there had been plenty provided to the Rebels). "Bailout" was a term used by the EARU - not by the Western Force. The needs for the funds has been well covered by numerous other posts. The WF had other options and took on the Alliance arrangements in good faith. (I'm not going to cover that ground again - go and do your own background reading) I/we the Rugby Public do not know a breakdown of the $$s to the Rebels. Just as there are few details on what appears to be a never-ending flow of $$s directed towards the Melbourne Rebels - which was never provided to other franchises with the same level of largesse by the ARU. Ask for more details if you wish but, just as for the Senate Inquiry, the EARU will simply place your query on notice.
Timbo (L)
Roar Guru
Position 16 now
Timbo (L)
Roar Guru
Every franchise cost the ARU at least 6.2 Mil per year! This logic only justifies the reduction not the selection.
GIGS20
Guest
I assume you're going to start listing all the people who are not members of the ARU board again I'll start you off Me Bakkies .....
Train Without A Station
Roar Guru
Why can't they fold it up. I highly doubt they would, but why can't they? And do Rugby WA have liabilities, or does the Western Force?
Train Without A Station
Roar Guru
Is it more than they would have been liable for otherwise? It's not like it's just $6M or $0.
Timbo (L)
Roar Guru
So your argument is it's only 6 Mil of additional funding, not 13. IT IS STILL $6 MILLION! I don't know where you work, but that is still a lot of cash to me.
Timbo (L)
Roar Guru
You clearly don't play chess. The ARU absorbs RugbyWA and all of its liabilities. The senate has recommended the WA government seek legal advice about recovering costs. The ARU won't be able to weasel out of it. The ARU are responsible for Rugby in Australia so they can't fold it up. Check Mate.