Melbourne Rebels club that cost Western Force its Super Rugby spot ‘may have been insolvent for five years’

The failed Melbourne club that cost the Western Force its Super Rugby spot seven years ago may have been insolvent for most of the time since the controversial decision.

PwC administrator Stephen Longley, put into the Melbourne Rebels rugby union club in January, has confirmed the outfit owes $23.2 million and is urging creditors led by the Australian Taxation Office to back a rescue proposal over a liquidation to recover more money.

However, Mr Longley’s statutory report to creditors also reveals the Rebels may have traded insolvent since the end of December 2018, a galling prospect to the Force and fans devastated by its axing from the Super Rugby competition in 2017.

After deciding to cull the number of Australian teams to four from five, rugby’s then governing body backed the Rebels over the WA expansion club, despite the promise of financial support from now Force owner Andrew Forrest.

The PwC report attributes the collapse to weak match-day and sponsorship revenues coming out of COVID-19 that exacerbated a history of trading losses, and “excessive” costs, including staff and player wages.

Rebels directors, who have organised a deed of company arrangement to reclaim the club, have also heaped blame on Rugby Australia, which controls the club’s licence.

They have threatened legal action against the body, claiming it did not honour its commitments.

The directors have cited an alleged funding shortfall of $6.05m between January 2020 and November 2023 and $2.04m in pay-as-you-go debts that, they say, should have been picked up by RA.

Mr Longley said in his report that the Rebels board would defend any insolvent trading claims on the basis that they assumed the club was financially supported by RA.

The Western Force has since been admitted to the revamped 12-team Super Rugby Pacific competition.

Commenting on Thursday after the release of the creditors’ report, RA denied any blame for the Rebels’ collapse, said it was unaware of the club’s “true financial state” and cast doubt on the rescue plan.

It also said that despite “multiple requests”, the club’s directors “have failed to provide any viable proposal or business plan regarding the future” of the Rebels, which continues to field a team at the expense of RA.

“Contrary to the former directors’ statement, RA met with the former directors at their request in March to discuss a potential resolution,” RA said in a statement.

“Despite RA’s request for a proposal, no fully-formed proposal was provided by the group.

“RA remains committed to rugby in Victoria, and will continue to actively consult with relevant stakeholders, as well as our legal and financial advisers regarding next steps.

“We will confirm our position on the future of the Melbourne Rebels Club in due course.”

The PwC report shows the $23.2m owed to creditors includes $1.3m claimed by 35 staff. Some $11.5m is owed to the ATO, $6.3m to directors and other backers, $1.1m to stadium owner Melbourne & Olympic Parks and $1m to Victoria’s State Revenue Office.

Mr Longley said that under the plan tabled by directors, staff would be fully paid out, while 15¢ in the dollar would be returned on the $21.8m owed to unsecured creditors.