Rugby Australia facing financial ruin if Israel Folau wins multimillion-dollar contract fight

Israel Folau has assembled a star-studded legal team to fight the most significant contract battle in sport today. The financial cost of defeat for Rugby Australia is likely to be prohibitive.

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Australian rugby is facing a loss of more than $12 million next year, with Israel Folau assembling a star-studded legal team to fight the most significant contract battle in sport on Saturday.

Having already hired high-profile solicitor Ramy Quatami, Folau has added to his team barrister Adam Casselden, who recently worked on the coronial inquest into the murder-suicide of Sydney family Maria Lutz and her children Ellie and Martin at the hands of their father Fernando Manrique in 2016.

Rugby Australia is already bracing for a multi-million payout of Folau’s $4 million contract, while they’re budgeting for a financial loss of $8 million in the next financial year because of limited home Wallabies Test matches in 2019 due to the World Cup.

News Corp Australia understands that RA is confident in its case to terminate Folau, but has crunched numbers on paying him out half of his four-year deal, adamant that he cannot represent the Wallabies or Waratahs again.

A big payout to Israel Folau won’t be good for Rugby Australia’s finances.

Folau will seek a full payout, and if successful, his $4 million on top of the forecast $8 million hit next year will leave Australian rugby on the precipice of insolvency.

RA recently announced a $5.2 million surplus for 2017-18, and it’s understood this money is being stored in reserve to counter the projected losses next year.

A large chunk of RA’s money comes from hosting Test matches, but in World Cup years the number of games is rapidly reduced.

Instead of the usual six or seven Tests, Australia will only host three this year; against the All Blacks in Perth, Argentina in Brisbane, and Samoa in Parramatta.

The last World Cup year in 2015 saw Australia host only two home Tests, and the code posted a $9.8 million loss the following year.

Any payout to Folau would significantly damage the code, and it’s understood that whichever way the result transpires, key sponsors will end their association with Australian rugby at the end of this year.

The Wallabies will only host three Tests this year. Picture: Getty Images

Any payout is expected to be kept confidential in a settlement.

The code of conduct hearing will be held on Saturday, but Sunday has been held over for additional time and it’s predicted the three-person panel will take two days to hear the cases of both sides, and may not reach a judgment until midway through next week.

Pressure is mounting on RA boss Raelene Castle, who will give evidence during the hearing, with expectations that Casselden will grill her on why the organisation attempted to insert additional clauses into Folau’s contract after he’d signed – the player rejected the request.

Casselden, a SANZAAR and World Rugby judicial officer, will front Folau’s case using evidence gathered by Quatami and his team.

RA’s case, to be put forward by Justin Gleeson SC, will focus on Folau’s breach of the general code of conduct in his contract, that states: "Treat everyone equally, fairly and with dignity regardless of gender or gender identity, sexual orientation, ethnicity, cultural or religious background, age or disability. Any form of bullying, harassment or discrimination has no place in Rugby".

Lawyers and workplace law experts across the country remain divided on the potential outcome of the case, which will set a precedent around employment and sporting contracts around religious expression and vilification.

It’s understood both parties are willing to take the matter to the courts if an amicable settle cannot be reached, but that would cost hundreds of thousands in additional legal fees.

In any case, Australian rugby is massively exposed to financial risk that threatens the operation of the game.

Originally published as Rugby Australia facing financial ruin if Israel Folau wins multimillion-dollar contract fight