A major faultline has formed between New Zealand Rugby and the private investors of Kiwi Super Rugby clubs, on the eve of the competition's new season.
At present, the Chiefs, Hurricanes, Crusaders and Highlanders all have private investors who have bought in as licensees to run major operational and marketing functions of the clubs. The Blues also had a private licensee until last year when New Zealand Rugby reacquired the licence that had been sold to NBR Richlister Murray Bolton.
Super Rugby's structure reverts to straight round robin from next season onwards. That means licensees are in for reduction in revenues due to the halving of local derbies. At present each Kiwi team hosts four of these a year. From next year each will host just two.
As licensees don't receive any money from television rights, they rely on ticket sales and sponsorships from those marquee matches as their bread and butter. They are demanding compensation from New Zealand Rugby to bridge the shortfall.
However, 1 NEWS understands that New Zealand Rugby's proposed offer to the licence holders is unacceptable, leaving the game's administrators in a precarious position. It is understood the club's will supply their feedback on the proposal to New Zealand Rugby in the next two days.
Compounding the compensation negotiation is the very nature of the license moving forward. Licensees want a move to perpetual licenses but feel New Zealand Rugby is seeking greater control while offering less consultation. Licensees are asking how they can be expected to provide investment if they don't have a say over the crucial components of what they own.
New Zealand Rugby are currently engaging in a major review of the sport at all levels. 1 NEWS can reveal global consulting giant McKinsey has already begun its initial work in this area. Until that review is concluded, there is enormous uncertainty regarding the structure of competitions at every level.
Should the licensees pull out of their investment, New Zealand Rugby would likely struggle to fund the five Super Rugby sides on their own, having also just lost major partners AIG.
What's more, with yesterday's announcement of a new Japanese competition beginning as early as next year, New Zealand Rugby could face a major challenge in retaining their best players.
Provincial Rugby insiders spoken to by 1 NEWS are even fearful that a season that includes both Super Rugby and a new Japanese league could effectively end the need for provincial rugby competition here.