The Melbourne Rebels' bid to be part of the 2025 Super Rugby Pacific competition is over, with the franchise to play their last game of Super Rugby next month.
In administration since January and owing in excess of $23 million, Rugby Australia has footed the bill for player and staff wages since, while also taking back the club's licence.
A brief flicker of hope with a consortium led by the former chairman of Qantas presenting a plan to fund the club - should the licence be handed back - was extinguished on May 30 when RA elected not to support the plan.
After 14 seasons, the Melbourne Rebels will be no more.
How did we get here? The Sporting News explains.
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What happened to the Melbourne Rebels? Why Super Rugby team entered administration
The Rebels went into administration in January, with their debts totalling AU$23.1 million, per ABC.
PwC voluntary administrator Stephen Longley stated in his report that the club may have been insolvent for more than five years.
Once they entered administration, Rugby Australia (RA) took over the Rebels' competition licence, and agreed to cover player and staff payments until the end of the 2024 season.
MORE: Melbourne Rebels contracts – Updated list of player movements
The Rebels and Rugby Victoria pinned the blame on RA, claiming AU$15 million in unpaid debts on lower funding contributions.
These allegations were refuted by RA CEO Phil Waugh, who insisted they met their obligations.
"We’re very diligent in terms of ensuring that we pay what we’re required to pay to our member union Super Rugby clubs and any creditors that we have," Waugh told AFR.
"We are confident that we have paid what we’re obliged to pay across all our agreements, which includes state unions, Super Rugby clubs, players and ATO requirements."
Rugby Australia's response to consortium proposal
"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."
How much do Melbourne Rebels owe?
In April, PwC administrator Longley recommended creditors accept a proposal from directors to save the club.
Club directors proposed a deed of company arrangement (DOCA). This would see employees guaranteed 100 percent of their entitlements, but would mean unsecured creditors would be left with as little as 15 cents per dollar.
"I am of the view that the likely return to creditors under the proposed deed will provide a materially better outcome for creditors than a winding up," Longley wrote in the report.
This potential solution was put to creditors in May.
Concerningly, PwC's report revealed that the Rebels recorded operating losses of $5.7 million (2023), $5.3 million (2022) and $5 million (2021) across the last three years.
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