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Melbourne - Australia's Melbourne franchise, who beat South African rival Southern Kings in the race for a Super 15 spot, continues to be troubled by funding issues as sponsors start to walk out on the Victoria-based outfit.
According to the Australian Associated Press, the Melbourne franchise is in "disarray", with investors pulling out after failing to agree to terms with the Australian Rugby Union over funding.
Members of the VicSuper15 group, who were involved in the winning bid for the new licence in the expanded 2011 competition, have "ceased negotiations" with the ARU, according to spokesperson Ray Evans.
He said the group had Heineken Cup-winning Australian coach Michael Cheika, who is currently with Irish side Leinster, lined up to coach Melbourne, and "possibly (Wallaby skipper) Rocky Elsom" but was unsure if that would now eventuate.
Mining magnate Kevin Maloney, one of the main backers of the franchise, is among investors to walk away saying the operation isn't viable.
The parties reached an impasse over funding, with the ARU unwilling to match an annual grant of A$4.2 million to the existing Australian Super sides.
They initially offered A$2.1 million, which was upped to A$3 million, but members of VicSuper15 say it's insufficient.
The Melbourne side was set to be the first privately-funded franchise in a departure from traditional state-owned Super Rugby teams, however if the ARU runs the team it will put it in a position of conflict of interest with the other state-run sides.
"They won't provide parity so we've basically said it's not commercial," Evans told AAP.
"That's the major sticking point, that they weren't prepared to provide the same amount of TV rights as the other states."
While the ARU will give the franchise a dispensation on the number of foreign players it can recruit, allowing up to 10, it's understood investors are concerned how they will pay for such players.
They are also wary of other costs such as marketing a new Rugby Union franchise in the AFL heartland.
According to the Australian Associated Press, the Melbourne franchise is in "disarray", with investors pulling out after failing to agree to terms with the Australian Rugby Union over funding.
Members of the VicSuper15 group, who were involved in the winning bid for the new licence in the expanded 2011 competition, have "ceased negotiations" with the ARU, according to spokesperson Ray Evans.
He said the group had Heineken Cup-winning Australian coach Michael Cheika, who is currently with Irish side Leinster, lined up to coach Melbourne, and "possibly (Wallaby skipper) Rocky Elsom" but was unsure if that would now eventuate.
Mining magnate Kevin Maloney, one of the main backers of the franchise, is among investors to walk away saying the operation isn't viable.
The parties reached an impasse over funding, with the ARU unwilling to match an annual grant of A$4.2 million to the existing Australian Super sides.
They initially offered A$2.1 million, which was upped to A$3 million, but members of VicSuper15 say it's insufficient.
The Melbourne side was set to be the first privately-funded franchise in a departure from traditional state-owned Super Rugby teams, however if the ARU runs the team it will put it in a position of conflict of interest with the other state-run sides.
"They won't provide parity so we've basically said it's not commercial," Evans told AAP.
"That's the major sticking point, that they weren't prepared to provide the same amount of TV rights as the other states."
While the ARU will give the franchise a dispensation on the number of foreign players it can recruit, allowing up to 10, it's understood investors are concerned how they will pay for such players.
They are also wary of other costs such as marketing a new Rugby Union franchise in the AFL heartland.
