In some positive transfer news Jahrome Brown is signing with the Chiefs. It’s good to see a quality player get the chance to further his rugby in a new environment. It aligns with my personal view that for Super Rugby to grow there has to be a free flow of players within the comp.
Melbourne Rebels Directors to sue RA
After promising myself that I’d be positive this year it has taken until October for the Melbourne Rebels to wear me down. I was taught by a client many years ago that as a director total ownership of events is a non-negotiable issue, the buck stops with the person at the top.
In a sign that the Melbourne Rebels directors won’t own a problem of their making and will seek to blame everyone but the person in the mirror for their troubles, they are suing RA, as reported in The Guardian. I expect the anti-rugby media to offer their readers the Rebels directors’ point of view, but as a friend once said, “Is it the truth or is your news limited?”.
For ease of reference to the complete omnishambles the Melbourne Rebels directors have made of the finances of the club, I refer the to Administrators Report.
2.8. Offences and liquidation recoveries
My preliminary view is that:
- The Company may have traded while insolvent since 31 December 2018;
- In the event that creditors resolve for the Company to be wound up, a Liquidator would undertake further investigations into:
- Potential voidable transaction claims totalling $911k;
- A potential claim against the Directors of the Company for potentially breaching their director duties and/or failing to prevent the Company from incurring new debts while the Company was insolvent of up to $16.9m; and
- Potential claims against RA raised by the Directors relating to:
- $6.05m of alleged underfunding of the Company for the period 1 January 2020 to November 2023;
- $2.04m in unpaid PAYG tax liabilities incurred by the Company while its players were representing Australia when RA is obliged to pay player costs when they are on national duty; and
- Other claims relating to potential breaches by RA of its arrangements creating the SRPC.
- Further investigations would be required to be undertaken by a Liquidator in order to reach a conclusion on the above claims, in particular, the quantification of the loss and damage claim in relation to insolvent trading. The claims against RA will be available in both Liquidation and DOCA scenarios.
Key Comments
While my investigations are ongoing, my initial findings are summarised below:
A history of trading losses, exacerbated since 2020 by the negative impact on revenue from the COVID-19 pandemic and reduced funding from RA since that time;
- Insufficient revenue being generated from sources other than RA, such as membership, sponsorship and game day revenue;
- An increasing expense base, including rising wage costs;
- Lack of readily available alternative funding sources to meet the material net asset shortfall and trading losses; and
- Failure to manage its statutory and lease liabilities.
- The Company appears to have maintained adequate books and records.
My preliminary view is that the Company may have been insolvent from at least 31 December 2018.
The Rebels have executed a DOCA (Deed of Company Arrangement) whereby the creditors agree to accept a lower return on the amount owing to forgive the debt. They directors are then effectively handed back the company to continue to trade. If my memory serves me correctly (and I’m sure I’ll be corrected if I’m wrong) the creditors or administrator cannot pursue insolvent trading claims against the directors personally if they perform as per the DOCA.
The Rebels debt totalled $23,167,766, including approx. $1.3m of employee entitlements which fortunately get 100 cents in the dollar. The valid creditors totalling $15,562,190 will get 15 cents in the dollar so a total of approx. $2.3m. This is generally accepted and the minimum at which the creditors will allow a DOCA to proceed.
Later in the report the administrator makes the following point.
- My preliminary view is that the Company may have traded while insolvent from 31 December 2018, and that it is likely that all debts that remain unpaid were incurred which could result in an insolvent trading claim exceeding $16.8m
Conclusion
While I feel sorry for the Rebels players and fans, there’s nothing worse than losing a connection to your tribe, or team. Many good people have invested time and effort in the club. Victorian Rugby has a great rugby culture and has done some positive things over the years. I can honestly say watching 20 or so players come to Brisbane week in and week out did nothing to foster the Melbourne club competition. My understanding was there was very little connection from Melbourne clubs to the Rebels.
As an Australian rugby fan, I cannot name a player who went to the Rebels and improved in the entire time they existed. I maintain, and always will, there’s enough talent for a fifth Australian Super team, but the economics just don’t add up ATM. For context, the Administrator found that the Rebels were technically insolvent from at least 31 December 2018 and probably before. The Western Force were cut from Super Rugby in 2017, so the Rebels were on thin ice then, perhaps already insolvent; clearly the ARU board made the incorrect decision at that time.
Do I wish the Rebels were still part of the competition? Yes, but don’t give me the rhetoric it’s the fault of the RA board that Melbourne fans didn’t attend games and/or buy merchandise. It’s also the fault of the Melbourne Rebels directors that they didn’t develop a corporate base to support their team.
Former Wallabies skipper Skelton hopeful of Spring Tour call-up
From Pravda
Former Australia captain Will Skelton says he’s keen to feature for the Wallabies in November having spoken to head coach Joe Schmidt. Skelton hasn’t featured for his country since leading the side at last year’s disappointing Rugby World Cup due to commitments with his French club, La Rochelle.
WXV2 Table
Australia play Scotland in the game of what will probably decide the tournament. Fun fact: if the Australian women win this weekend they’ll have won three in a row for the first time in their history. Go you good things, history beckons.
In other news, the English women have won 49 of their last 50 tests with the RWC final being the only blemish in that time.
Yowie is back for round two tomorrow. Have at it.
