By Carla Jaeger
Rugby Victoria has filed just one annual report to the consumer regulator since it took control of the Melbourne Rebels in 2017 – the same year it admitted the Super Rugby club was bleeding millions, and there was “significant doubt” it could continue operating as a going concern.
The governing body of rugby in Victoria – which owned the debt-riddled Super Rugby franchise until it entered into voluntary administration last month – could not explain why it had failed to submit any annual reports to Consumer Affairs Victoria since 2018, despite being legally required to do so.
Daniel Maiava playing for the embattled Melbourne Rebels earlier this month in a Super Rugby Pacific trial match.Credit: Getty
The six-year administrative failure was uncovered after this masthead made a request to Consumer Affairs Victoria for Rugby Victoria’s annual reports on Friday. The regulator soon contacted the organisation to chase the missing documents.
Consumer Affairs Victoria has been unable to explain what appears to be a massive governance failure, and declined to respond to detailed questions about how this oversight was possible.
Rugby Victoria president Neil Hay was adamant that all the required annual reports and financial statements had been completed, but could not explain why they had not been submitted to the regulator.
“They’re done every year – so why weren’t they sent? I’ve got as much of an idea as you,” Hay said on Monday.
Hay said an email to Consumer Affairs Victoria containing the missing documents had been drafted, with a plan for it to be sent by Monday evening.
Hay added the discovery had come at a stressful time, noting the handover to interim CEO Shelley Nowlan – who stepped into the role in October after long-time boss Chris Evans resigned, as well as the Rebels’ desperate bid to survive past this season.
But the president conceded it could not be the entire reason why they could have possibly breached their obligations, given that the documents had not been lodged since 2018. Effectively, Rugby Victoria has filed one annual report since taking ownership of the Super Rugby franchise.
The apparent failure could result in fines for the organisation, but it is not known whether the regulator has or plans to issue these fines.
What the Melbourne Rebels owe
- $11.6m owed to the Australian Taxation Office
- $5.7m owed in loans
- $2.8m owed to suppliers, including amounts advanced by sponsors
- $1.1m owed to MOPT relating to unpaid stadium usage, plus an additional amount in relation to future lease liabilities under the existing agreement
- $712k owed to the State Revenue Office in relation to unpaid payroll tax
Under the governance tab of its website, Rugby Victoria has links to eight documents identified as annual reports from the years 2014 to 2022. The 2019 report is the only one of those documents to contain a dedicated finance report – a brief single-page summary with two bar graphs.
Rugby Australia was contacted for comment.
Rugby Victoria and the Rebels are separate entities, who were governed by separate boards and executive teams.
However, Rugby Victoria president Hay and Owain Stone – RV’s finance director – also sit on the board of the Melbourne Rebels.
Rugby Australia’s Phil Waugh in 2022 alongside Rugby Victoria president Neil Hay and Reece Hodge, of the Melbourne Rebels. Credit: Getty Images
Tim North, another Rebels board member, served as Rugby Victoria president from 2017 until his resignation in 2020. Hay was elected as North’s successor unopposed.
In 2013, after three seasons under private ownership, control of the Super Rugby franchise was handed to Rugby Victoria by the club’s shareholders. It returned to private ownership in 2015 when businessman Andrew Cox purchased the club. RV reclaimed ownership of Rebels in 2017, when Cox sold it back to them for $1.
That last financial report lodged to the regulator in 2017 noted that at the end of that year, the Rebels had accumulated a net loss of $1.3 million and a negative working capital of $2.4 million.
The report added: “Total liabilities exceeded total assets by $2,232,265 at 31 December 2017 (1 July 2015 -31 July 2016: net liabilities of $942,150).
“These events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Rebels ability to continue as a going concern.”
Going concern is an accounting term used to describe an organisation that will be able to pay off its debts when they are due, and can continue operations for the forseeable future.
In an attempt to salvage the club from its grim financial position, the Rebels entered into a convertible note facility – essentially a loan of up to $1.5 million which gave the funder the option to covert that money into equity of the club – the report noted.
It added: “In addition, the board members of the Rebels are in discussions with a number of stakeholders to obtain further financing to raise debt and/or capital; raising revenue from a range of sources and are focusing on tighter control over expenditure and revenue to manage cash-flow deficits.
“Management and the board believe that these steps will continue to improve the financial position of the Rebels and are of the opinion that there are reasonable grounds to believe that the Rebels’ financial position will continue to improve, and adequate steps have been initiated to ensure the company’s ability to continue as a going concern.”
Hay, North and Stone are among the seven Rebels board directors demanding that Rugby Australia cough up $8 million they say is owed to the club. They allege the governing body owes $6 million for underfunding the club over a number of years, and an additional $2 million to cover the cost of Rebels’ player wages while they were on Wallabies duties.
Asked about these demands, which were outlined in a creditors’ meeting, Rugby Australia boss Phil Waugh told this masthead: “There’s a claim against Rugby Australia – and it’s exactly that, it’s a claim. We’ll work through that with the administrators and the appropriate process.”
But even if Rugby Australia were to fork out that money, the Rebels would need a big helping hand to pay off their remaining debt. The administrators said the club had just $17,300 left in the bank, and assets consisting of office furniture, gym equipment and two cars. The value of those assets are not known.
That meeting also revealed the Rebels board of directors had been issued penalty notices by the Australian Tax Office in June, which means the seven board members could be forced to pay for the $11.6 million debt the Super Rugby club had accumulated.
These notices require directors to act within 21 days – otherwise the recipient become personally liable for the debt.
As a member union, Rugby Australia provides funding to Rugby Victoria through its community grants. The state body received $377,000 from Rugby Australia in the past financial year. The state governing body provides support and services to clubs, members and organisation within Victoria.
“Rugby Victoria generates its revenue through sponsorships, government grants and fundraising. Income and funding are re-invested back into Victorian rugby for special projects, education, elite pathways and high performance with direct benefits to members enhancing participation opportunities for all,” its website reads.
Last week, 10 administrative Melbourne Rebels staff, including chief executive Baden Stephenson, were made redundant, with the remaining staff and coaches put on four-month contracts to see out the Super Rugby campaign.
Stephenson, who has been chief executive of the Rebels since 2017, was informed by Rugby Australia CEO Phil Waugh he would not be offered a new contract. Nine other staff were given the bad news last week, and players and coaching staff were also addressed by Stephenson.
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