Brumbies open to centralisation high-performance changes

The ACT Brumbies have engaged lawyers to initiate a dispute resolution process with Rugby Australia in a bid to thwart what the club describes as a "total takeover" attempt.

In another centralisation development, the civil war between the Brumbies and Rugby Australia is threatening to spill into the court room as the Canberra franchise stands its ground in the fight to remain independent.

Lawyers for the Brumbies sent two letters to Rugby Australia this week after a team of auditors arrived in Canberra to examine the club's financial stability.

The first was a notice of dispute, citing differences in interpretation of the participation agreement. The second said the club would seek legal intervention if Rugby Australia attempted to terminate the club's licence.

The growing divide prompted Brumbies chief executive Phil Thomson to break his silence about the tension, declaring "we won't roll over" and slamming a lack of transparency and collaboration.

Rugby Australia has the rights to audit each Super Rugby franchise per the agreement to play in the competition and sent Deloitte to Brumbies headquarters on Wednesday. It's understood the initial findings proved the Brumbies were solvent, but a final report is yet to be tabled.

The audit included copying financial histories and checking compliance with the contracting rules.

"It was an aggressive approach that [Rugby Australia] has taken. There was obviously an intent to come here and find something and that they reserved the right to terminate the participation deed retrospectively with immediate effect," Thomson said.

"It was pretty clear cut what they were coming here for. There hasn't been any collaboration, there's been no transparency. There's been no cost analysis to show how this takeover proposal of theirs will work.

"The lack of detail has been appalling. Our board has asked for details and have received nothing whatsoever other than loose details and nothing in writing."

Noah Lolesio, centre, was one of several Wallabies contracted players to miss out on World Cup selection. Picture by Keegan Carroll
Rugby Australia threatens termination

Rugby Australia has attempted to ease concerns in Canberra in recent weeks.

It says it has no intention of moving the Brumbies away from the capital and the club would continue to operate in Canberra as part of a centralised structure.

Rugby Australia has also defended its rights to audit the Brumbies, but the timing of the move and the threat of terminating the licence has fuelled an element of distrust and growing angst.

It's understood concerns at head office were raised as the Brumbies attempted to plug a $1.7 million hole in their finances.

Rugby Australia provided a $1.7 million grant to the Brumbies this year, but it was reclassified as a loan at the end of September after the governing body abandoned its private equity campaign.

It forced the Brumbies to find alternative revenue streams, and Rugby Australia instigated an audit to ensure viability.

Australian Super Rugby clubs are also waiting for Rugby Australia to distribute funds from the renegotiated revenue from New Zealand's broadcast deal.

It's understood New Zealand Rugby officials have been made aware of the situation between the Brumbies and Rugby Australia given the Super Rugby partnership, and they were shocked at the hostile nature of discussions.

Thomson called on Rugby Australia to "appropriately fund" teams rather than pressuring them into a centralised system, where Rugby Australia would control high performance and commercial business.

Rugby Australia officials don't want to publicly comment on the alignment process. The Brumbies and Queensland Reds have agreed to high-performance alignment, but have fiercely rejected attempts to gain control of any other elements of their business.

Rugby Australia says it will continue to work with the teams to find common ground, and that centralisation may not be a "one-size-fits-all" approach.

But for now, the relationship between the Brumbies and Rugby Australia is at its lowest ebb. Thomson confirmed the Brumbies' legal team had reached out to Rugby Australia.

"We sent a letter on Wednesday to Rugby Australia to notify them that under the terms of the participation deed, we were giving them formal notice of a dispute," Thomson said.

"We are asking them to meet with us as outlined in the process to try to resolve the differences we have.

"We don't have the time, the resources or the money to be continuing with this. It's a David v Goliath sort of thing at the moment, we should be putting our time into focusing on the real issues in rugby and working together.

"On Thursday, we sent another letter saying that we believe the potential termination of the deed on the grounds of insolvency are unfounded and our next step would be an injunction.

"It's a last resort and we don't want to go down that path. But there are a number of contentious issues within our interpretations and we are prepared to fight this in court to make sure it's resolved."

Are the Brumbies financially stable?

Thomson said Rugby Australia had not responded to the letters.

Asked if the Brumbies were financially stable, Thomson said: "We are definitely a solvent organsiation. They won't find any issues there.

"We were fine with the audit because our books have always been open to Rugby Australia. They're entitled to audit our books and we have been reporting to them monthly, so they have plenty of evidence that we are solvent.

"It is challenging in rugby and we need to make sure the governing body funds the clubs appropriately.

"We need to ensure the $1.7 million that was reduced from our broadcast money when the Western Force came back is reinstated, and that the increase in revenue from New Zealand flows through for 2024 and 2025 as Rugby Australia agreed with our chairman this year."

Thomson, who has worked for the Wallabies and Rugby Australia as the integrity unit manager, was confident the organisations could work together to find solutions despite their significant differences.

"We want to so we can get rugby back on the right path," Thomson said.

"But we want to be a partner working with them, not have a gun to our head and under the process of how they're trying to deal with us now.

"It's not a nice position to be in. We haven't been able to sort this out and now we're in dispute ... we're really struggling to figure out why and how we're in this position, and why we're being treated like this by Rugby Australia.

"I've never seen anything so bad. As someone who has been in the game for so long, it's disappointing to see the relationship with the national body go this way.

"To be potentially heading into court and an injunction process, it's not what you want to see. We want to ensure there is an aligned high-performance plan to put rugby in the place it should be.

"We're very thankful from the support we've had from our members and sponsors and the ACT government.

"We don't agree with the takeover model Rugby Australia is proposing. It's not centralisation, it's a total takeover. It's not the Irish model or the New Zealand model ... it's a total takeover of our business and we'll fight to remain the way we are, ensure the ongoing success of the Brumbies and that we remain in the ACT."

Rugby Australia says it is no longer pursuing the club's intellectual property, which was a key sticking point in the initial centralisation discussions. Thomson, however, said: "the wording they have proposed is not as clear cut as they have reported."

The ACT Brumbies concede a major overhaul is needed, but chief executive Phil Thomson has questioned whether Rugby Australia has the right people to make the changes required to revive the game.

Rugby Australia's centralisation push has hit major hurdles since it first announced its intentions to align high performance and commercial operations of all Super Rugby franchises.

Details, however, have been limited and the Brumbies and Queensland have led the push against the proposal after being asked to cede control of their businesses.

Tension has been running high between the Brumbies and the governing body for the past two months, but negotiations are expected to ramp up when all Rugby Australia officials return from the World Cup next week.

Thomson took a swing at Rugby Australia just days after engaging lawyers to give the governing body a notice of dispute and flag potential legal action if it was to try to terminate the Brumbies' licence.

Thomson revealed the Brumbies had put a centralisation proposal to Rugby Australia but the franchise did not get any feedback.

The vacuum of information and lack of a formal proposal other than a one-page document presented by Phil Waugh has created concerns and an element of doubt about the process.

"Something definitely has to change. Rugby Australia keep saying that, but they do not have any detail around what that change looks like other than taking control so they can make change," Thomson said.

"We need to make sure we have a high-performance plan agreed to so we can all move in the right direction. To do that, you need the right people in place at Rugby Australia with the right skill and capacity to bring people together.

"Those people don't currently exist at Rugby Australia. That has to be a priority. Then we can work together to make sure we're all accountable.

"We need one unity of purpose for everyone. We don't have that at the moment because there's no direction at all."

The Brumbies have been the best performing Australian team, but have struggled with a decline in crowds. Picture by Keegan Carroll
What would the Brumbies agree to?

The end of the World Cup will accelerate the centralisation push, but bridges will need to be mended for the Brumbies and Queensland to come to any agreement with Rugby Australia.

Rugby Australia is also dealing with the fallout of the Wallabies' poor World Cup campaign, and the constant speculation about Eddie Jones' future as coach.

All franchise have agreed to high performance alignment - including central contracting, centralised staff, centralised coaching and other elements - despite chaos in the Wallabies ranks.

For example, Rugby Australia already has 37 contracted players spread around Super Rugby teams. Less than 20 of those players were picked in the World Cup squad. Franchises also agreed to a resting policy this year, sacrificing Super Rugby ambitions for the greater good of the Wallabies.

But centralising high performance structures won't fix the under-performing commercial side of rugby, with all but one team facing financial pressure and Rugby Australia seeking a loan to help it survive through to the British and Irish Lions series in 2025.

Despite the widening gap in philosophies, Rugby Australia and the Brumbies still hope they can find some level of agreement before the end of the year to ensure the off-field war ends before the 2024 season begins.

"It's not ideal, but we're not going to stop fighting [for our future]," Thomson said.

"We have an experienced Super Rugby department who are preparing the team for next year and so are other areas of the business.

"The communication around this [centralisation] is damaging for us and for rugby. The question around our solvency are distressing for staff because they're worried about the future.

"There are partners, sponsors and members - who have all been very supportive. We are solvent and we are doing our best to resolve this as soon as possible so we can all focus we deliver a Super Rugby season and rugby can move forward.

"We are fighting for the Brumbies to continue as they have for the last 27 years and for the game to grow."

The model for change

One centralised model being floated includes keeping all Brumbies operations based in Canberra under a national approach that is run locally.

Community rugby would be split off and run by the ACT and Southern NSW Rugby Union, while a separate Brumbies entity would be created and overseen by Rugby Australia.

Rugby Australia has eased its stance on taking control of individual intellectual property rights - a key sticking point in both the ACT and Queensland - but there is still some concern around the detail of that arrangement.

Rugby Australia says it wants to collaborate and that it may have different centralised models to suit different franchise set ups, with some of the bigger changes unlikely to be implemented until next year.

Thomson said the Brumbies were still supportive of centralised high performance and was confident the parties could work together despite their differences.

"We believe if the teams are funded appropriately, we can survive and flourish as an organisation," Thomson said.

"We certainly won't be rolling over and we've shown that by our actions, which have been very time consuming and costly.

"We'd like to sit down and work with [Rugby Australia]. We have offered to in the past, but it hasn't been taken up.

"We have put a [centralised] proposal to Rugby Australia but they didn't address what we put in writing to them. Contracting players and staff for alignment, we have no issues and we would give ground on that. As long as the commercial side and community game remained as one in the same business."

This article (Part 1 & Part 2) produced by Chris Dutton for the The Canberra Times and has been republished with their permission.