Fears Israel Folau payout could trigger Super Rugby club collapse

Rugby leaders are worried the alleged multimillion-dollar payout to Israel Folau could put some Super Rugby clubs at risk of collapse.

Rugby Australia chief executive Raelene Castle in Sydney on Thursday. Picture: AAP

Rugby leaders are worried the governing body’s alleged multimillion-dollar payout to Israel Folau could put some Super Rugby clubs at risk of collapse, as Rugby Australia chief Raelene Castle defended the decision to settle the case as being cheaper for the game.

As Ms Castle on Thursday labelled rumours of an $8m settlement as “wildly inaccurate”, Rugby WA chairman John Edwards said most Super Rugby teams “break even at best” and clubs would “be on edge” as the game’s financial state hinged on a broadcast deal in 2021.

“If they’ve carved out a reasonable amount for Izzy, I’d say there’d be a few clubs at risk now,” Mr Edwards said.

“Anything out of the bank that goes to Izzy will have an impact on the way the game is played.”

Mr Edwards said Super Rugby clubs often relied on further financial help on top of the approximately $5m they each receive from Rugby Australia.

However, he acknowledged that Western Australia, without a Super Rugby team since the Western Force lost its licence in 2017, would be less affected. Mr Edwards quit the Rugby Australia board in the wake of that decision.

“We’ve been told all along the grants they provide for the grassroots clubs in Western Australia won’t be affected. Hopefully that’s not impacted,” he said.

“The Super Rugby clubs are in trouble more often than not … so they would be concerned what this means for them.

“The last time I looked, Rugby Australia had about $8m in treasury and they were staring down another loss-making year. They really only have one more year of revenue from the current broadcasting arrangement and still haven’t secured the next one.”

The Australian understands Rugby Australia agreed to compensate Folau several million dollars under the terms of the settlement that took 15 hours to negotiate this week. Neither side has confirmed the amount.

While a Rugby Australia spokesman said earlier this week there had been “a parting of the way” between Folau and the governing body, he could still play for an overseas club.

The Australian also understands that, while Rugby Australia must be a third party that signs any professional contract between a player and a club in Australia, if the makeup of Rugby Australia’s leadership drastically changes in the future the attitude to approving such a contract could change.

Ms Castle on Thursday defended her position as the head of the game and argued Rugby Australia had not backed down from its values of inclusiveness.

“At every stage (Rugby Australia) looked to … ensure the very, very key value of inclusiveness stood up,” she said.

“We didn’t back down … we needed to give the game cost certainty and the feedback we were getting from our rugby community was that they wanted this matter settled.

“No, we didn’t get it wrong. At the end of the day we stood up for the values of Rugby Australia, the person that chose to breach the code of conduct was found guilty and his contract was ultimately terminated because of that. That stands up and continues to say, ‘this is an inclusive sport’.

“There won’t be any money taken out of community rugby and we won’t have to make any changes to the budget situation.”

Roger Davis, chairman of the NSW Waratahs Super Rugby club, said the settlement was “a good compromise” but acknowledged there would be some financial cost to Rugby Australia.

“There was a potential $14m cost if it went to trial … That’s gambling with the future of the cost here,” he said.

“We will never be able to please everyone. Whatever cost was incurred, I think is mitigated by the upside that we now have a clean slate.”