SANZAR appointed a two-man panel of experts after initially being unable to make a unanimous decision and announced last night that Melbourne would be the new team.

The panel said Melbourne provided greater commercial benefit to SANZAR than the Southern Kings, from Eastern Cape Province.

"This is a vote for commonsense," said ARU chief executive John O'Neill.

"Equally we want to recognise that the bid put forward for the Southern Kings was a very good one and it took an even better bid for Melbourne to win out.

"At some point in time, SANZAR will no doubt enjoy the company of the Southern Kings.

"However, at the moment, this is the right decision for SANZAR and it's a momentous day for Australian rugby and the people of Melbourne."

The Super 15 will comprise five teams from each of Australia, South Africa and New Zealand.

Victorian Rugby Union president Gary Gray said the decision would provide a huge boost to rugby in Victoria with a Super rugby team providing a direct pathway to top level rugby for the first time.

‘‘At the end of the day, we (Victorian rugby) are 100 year’s old and we’ve waited 100 years for this day,’’ Gray said. ‘‘This is the greatest opportunity for Victorian and Australian rugby to further develop so many people have wanted this and have now been rewarded.’’

Gray said the local rugby community was strong enough to support the team, which he expected would be competitive from the start. The VRU is aligned with consortium that is interested in investing in the new team.

Melbourne’s success comes after it was overlooked in 2004 when the ARU opted to place its fourth Super rugby team in Perth, giving birth to the Western Force when the competition was expanded to the Super 14 in 2006.

Melbourne had been the favourite to secure the Super 15 franchise, given that the team would play within the Australian conference when the competition was revamped in 2011.

But South Africa had pushed heavily for the Southern Kings forcing the decision into arbitration.

The ARU’s next step would now be to determined an ownership structure for the team.

The initial bidding process fell apart when rival interests could not work together and the ARU, which itself had been accused of attempting to hijack the process, appointing an advisor to establish a sutiable private ownership and investment model.

A decision is expected to be announced within coming weeks.

with AAP