Rugby Australia exposed to Melbourne Rebels tax debt, PwC lawyers claim, as $30m battle heats up

Rugby Australia could be exposed to the full weight of a $11.5m tax debt, after the Melbourne Rebels franchise collapsed, lawyers from PwC claim.

Rugby Australia Chair Daniel Herbert with CEO Phil Waugh. Photo by Morgan Hancock/Getty Images

Rugby Australia could be exposed to the full weight of a $11.5m tax debt, after the Melbourne Rebels franchise collapsed, lawyers claim.

But Rugby Australia and the former Directors of the Rebels are at loggerheads over the debt and who is liable for it.

The former Melbourne Rebels board are currently engaged in a legal battle with RA in the Federal Court, where they are seeking $30m in damages from the governing body.

Earlier this year the Rebels were placed in voluntary administration with debts owed to creditors exceeding $23 million, including the $11.5m debt to the Tax Office.

RA have dismissed the assertions made and referred to a statement they released in October. Back in October RA claimed the Rebels’ decision to launch legal action was the Melbourne club’s directors attempt to “shift blame for their financial mismanagement”.

The Australian understands RA will again be pushing back on the latest claims.

RA has long claimed the Rebels directors are solely responsible for the tax debt which has always been denied by the Melbourne club’s leadership.

RA has previously claimed the Rebels are attempting to “shift blame for their financial mismanagement” of the club.

Before the Rebels’ collapse, the governing body had been seeking a private equity deal to supercharge its finances, but was unable to seal a deal.

RA instead set up an $80m loan with Pacific Equity Partners, most of which has now been drawn down.

However, the British and Irish Lions tour of Australia in July next year - their first visit here in 12 years - was expected to be a cash cow for RA to clear some of its debts. They were also holding out hope of major windfalls for the World Cups, with the mens’ competition held here in 2027 and the womens’ in 2029.

However, the collapse of the Rebels and financial problems at the Waratahs have derailed RA’s plans.

RA chairman Daniel Herbert said when shutting down the Rebels in May that the club had already received almost $14m in bailouts in 2017, with the debts just getting worse.

“There’s been tens of millions of dollars that has been spent on this franchise over and above other Super Rugby clubs, and (now its) to be $23 million in debt again,” Herbert said during a press conference at Melbourne’s Rialto tower.

The Rebels have floated a “$18m plan” to move the Melbourne team from its costly home base at AAMI Stadium out to Tarneit in the city’s west in a bid to save the team.

RA is due to file their defence on Thursday. The case was due back in the Federal Court on December 20.

Editors Note – A previous version of this story quoted from a letter from the lawyers for the MRRU Directors but incorrectly stated that the quote was from the lawyers for the Administrator. The Australian apologises for the error