The ACT Brumbies have engaged lawyers to initiate a dispute resolution process with Rugby Australia in a bid to thwart what the club describes as a "total takeover" attempt.
In another centralisation development, the civil war between the Brumbies and Rugby Australia is threatening to spill into the court room as the Canberra franchise stands its ground in the fight to remain independent.
Lawyers for the Brumbies sent two letters to Rugby Australia this week after a team of auditors arrived in Canberra to examine the club's financial stability.
The first was a notice of dispute, citing differences in interpretation of the participation agreement. The second said the club would seek legal intervention if Rugby Australia attempted to terminate the club's licence.
The growing divide prompted Brumbies chief executive Phil Thomson to break his silence about the tension, declaring "we won't roll over" and slamming a lack of transparency and collaboration.
Rugby Australia has the rights to audit each Super Rugby franchise per the agreement to play in the competition and sent Deloitte to Brumbies headquarters on Wednesday. It's understood the initial findings proved the Brumbies were solvent, but a final report is yet to be tabled.
The audit included copying financial histories and checking compliance with the contracting rules.
"It was an aggressive approach that [Rugby Australia] has taken. There was obviously an intent to come here and find something and that they reserved the right to terminate the participation deed retrospectively with immediate effect," Thomson said.
"It was pretty clear cut what they were coming here for. There hasn't been any collaboration, there's been no transparency. There's been no cost analysis to show how this takeover proposal of theirs will work.
"The lack of detail has been appalling. Our board has asked for details and have received nothing whatsoever other than loose details and nothing in writing."
Rugby Australia has attempted to ease concerns in Canberra in recent weeks.
It says it has no intention of moving the Brumbies away from the capital and the club would continue to operate in Canberra as part of a centralised structure.
Rugby Australia has also defended its rights to audit the Brumbies, but the timing of the move and the threat of terminating the licence has fuelled an element of distrust and growing angst.
It's understood concerns at head office were raised as the Brumbies attempted to plug a $1.7 million hole in their finances.
Rugby Australia provided a $1.7 million grant to the Brumbies this year, but it was reclassified as a loan at the end of September after the governing body abandoned its private equity campaign.
It forced the Brumbies to find alternative revenue streams, and Rugby Australia instigated an audit to ensure viability.
Australian Super Rugby clubs are also waiting for Rugby Australia to distribute funds from the renegotiated revenue from New Zealand's broadcast deal.
It's understood New Zealand Rugby officials have been made aware of the situation between the Brumbies and Rugby Australia given the Super Rugby partnership, and they were shocked at the hostile nature of discussions.
Thomson called on Rugby Australia to "appropriately fund" teams rather than pressuring them into a centralised system, where Rugby Australia would control high performance and commercial business.
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Rugby Australia officials don't want to publicly comment on the alignment process.
The Brumbies and Queensland Reds have agreed to high-performance alignment, but have fiercely rejected attempts to gain control of any other elements of their business.
Rugby Australia says it will continue to work with the teams to find common ground, and that centralisation may not be a "one-size-fits-all" approach.
But for now, the relationship between the Brumbies and Rugby Australia is at its lowest ebb. Thomson confirmed the Brumbies' legal team had reached out to Rugby Australia.
"We sent a letter on Wednesday to Rugby Australia to notify them that under the terms of the participation deed, we were giving them formal notice of a dispute," Thomson said.
"We are asking them to meet with us as outlined in the process to try to resolve the differences we have.
"We don't have the time, the resources or the money to be continuing with this. It's a David v Goliath sort of thing at the moment, we should be putting our time into focusing on the real issues in rugby and working together.
"On Thursday, we sent another letter saying that we believe the potential termination of the deed on the grounds of insolvency are unfounded and our next step would be an injunction.
"It's a last resort and we don't want to go down that path. But there are a number of contentious issues within our interpretations and we are prepared to fight this in court to make sure it's resolved."
Thomson said Rugby Australia had not responded to the letters.
Asked if the Brumbies were financially stable, Thomson said: "We are definitely a solvent organsiation. They won't find any issues there.
"We were fine with the audit because our books have always been open to Rugby Australia. They're entitled to audit our books and we have been reporting to them monthly, so they have plenty of evidence that we are solvent.
"It is challenging in rugby and we need to make sure the governing body funds the clubs appropriately.
"We need to ensure the $1.7 million that was reduced from our broadcast money when the Western Force came back is reinstated, and that the increase in revenue from New Zealand flows through for 2024 and 2025 as Rugby Australia agreed with our chairman this year."
Thomson, who has worked for the Wallabies and Rugby Australia as the integrity unit manager, was confident the organisations could work together to find solutions despite their significant differences.
"We want to so we can get rugby back on the right path," Thomson said.
"But we want to be a partner working with them, not have a gun to our head and under the process of how they're trying to deal with us now.
"It's not a nice position to be in. We haven't been able to sort this out and now we're in dispute ... we're really struggling to figure out why and how we're in this position, and why we're being treated like this by Rugby Australia.
"I've never seen anything so bad. As someone who has been in the game for so long, it's disappointing to see the relationship with the national body go this way.
"To be potentially heading into court and an injunction process, it's not what you want to see. We want to ensure there is an aligned high-performance plan to put rugby in the place it should be.
"We're very thankful from the support we've had from our members and sponsors and the ACT government.
"We don't agree with the takeover model Rugby Australia is proposing. It's not centralisation, it's a total takeover. It's not the Irish model or the New Zealand model ... it's a total takeover of our business and we'll fight to remain the way we are, ensure the ongoing success of the Brumbies and that we remain in the ACT."
Rugby Australia says it is no longer pursuing the club's intellectual property, which was a key sticking point in the initial centralisation discussions. Thomson, however, said: "the wording they have proposed is not as clear cut as they have reported."
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