So that is true, but completely misreading the scenario. On their own, SRU not only did not engage, but did everything imaginable to deride the NRC. Strangely enough, NSW teams did poorly.
There was a fail, but it was not the NRC, and very much focussed on Sydney.
Not all of the clubs failed to support the NRC at the start. You may recall that the 4 northern clubs were quite enthusiastic in setting up the Northern Sydney Rays to the extent that they even threw some cash in. Unfortunately, RA moved the goal posts and players from the clubs were drafted to other less well-organised franchises which diluted the local involvement and then RA changed it to the Sydney Rays and it was all over from that point.
Sydney Uni also tried to run a franchise and I suspect that playing at Leichhardt Oval (because the rectangular field at Uni hadn't been completed) and being forced to be in a faux joint venture with Balmain because RA stipulated that a club could not be a stand alone participant were part of the problem there.
Southern Districts, Wests and Parramatta were on board with a western group of clubs in the Sydney Rams
But there were certainly come of the clubs didn't engage at all, but as the NRC evolved even those clubs which were enthusiastic at the start became less so over time.
But my larger points are: it won't work if the clubs have generic names and they don't represent specific parts of the city and have a direct link to an established club. And in terms of the competition as a whole, all sporting organisations (except perhaps rugby) realise that you have to make it in Sydney and/or Melbourne if you want to have a successful sporting competition in Australia. Regardless of where the fault lies, if rugby can't do this then there will be a significantly reduced ability to sell sponsorships and marketing, with an obvious flow on to any broadcast deal and media exposure.
As a slightly related point - on Saturday the Waratahs played the Force. Once upon a time this would have rated at least a full page in the Sunday paper - more likely a double page spread with pictures and a couple or articles on the game and the competition as a whole. Instead the game got three very short paragraphs of summary at the bottom corner of a page lost in amongst a range of other sports. No pictures, no game analysis, just the bare minimum. To paraphrase Oscar Wilde, there's only one thing worse than being criticised and that's not being talked about at all. Rugby has pretty much reached that point in the larger sporting world of Sydney.
EDIT: And I was generally supportive of the NRC when it started on the basis that there would be some club involvement and teams would have some local flavour. I now realise that this isn't really possible and existing club names, colours etc need to be incorporated to make it a success because brand recognition is important.