On the eve of the launch of the 2014 Super Rugby season Australian Rugby Union boss Bill Pulver concedes the competition will run at a loss this year.
Heading into a difficult year financially for Australian Rugby, Pulver told Grandstand that Super Rugby poses the biggest financial challenge for the ARU.
Super Rugby will lose money in 2014, but we are putting plans together to try and address that.
Australian Rugby Union chief executive Bill Pulver
"Super Rugby will lose money in 2014, but we are putting plans together to try and address that," Pulver said.
"On one hand we have an incredibly vibrant competition with five Australian teams playing in the best provincial competition in the world. We are just trying to get the financial model right."
Pulver and the ARU board are anxious to begin negotiations for a new broadcast deal with the current contract expiring at the end of 2015.
Before Australian Rugby and SANZAR, the governing body of Super Rugby, can bid for an increased broadcast rights deal Pulver said the product must be improved.
"First of all we must agree on the format for the new competition which would start in 2016 and go through to 2020," he said.
"There is talk of new teams with the possibility of a team from Argentina and a team from Asia adding a little more interest."
Also ahead of a new broadcast rights deal Pulver is hopeful Australian teams can achieve success at Super Rugby, World Sevens and Test level to increase the appeal of the product.
With only four home Tests scheduled for 2014 the ARU is in for a lean year of revenue.
Last year the ARU began 2013 with a deficit of $8.3 million but on the back of hosting a lucrative British and Irish Lions tour recovered to achieve a cash surplus of $10m by the end of the year.
We all know that Melbourne has been losing money. It has been tough in Perth, and even for the Waratahs it has been hard to break even.
Rugby New South Wales chairman Nick Farr-Jones
The result was also achieved through cost savings by the ARU that included axing its Sydney and Brisbane development academies.
Former Wallabies captain and now Rugby New South Wales chairman Nick Farr-Jones acknowledges the cost savings made by the ARU but said the game is in for tough times financially.
"Super Rugby is hard," Farr-Jones told Grandstand.
"We all know that Melbourne has been losing money. It has been tough in Perth and even for the Waratahs it has been hard to break even."
National Rugby Championship looms as a financial gamble
We are facing very tough competition from the other winter sports. They are well funded and are getting a lot more out of television rights than we do."
Farr-Jones has concerns about the financial viability of the new second-tier competition, the National Rugby Championship, to kick-off later in the year.
"I'm nervous about the affordability of the National Rugby Championship," Farr-Jones said.
Pulver is confident the new competition will succeed and said it is important as a rugby pathway and also to offer broadcasters additional content.
In rugby's current financial climate Farr-Jones also believes players need to play a role in keeping their wage demands realistic.
"Can we afford one third of our revenues to to be paid to players?" Farr-Jones asked.
"Should they be more on incentive programs?"
Rugby Union Players' Association chief executive Greg Harris said the players are aware of the financial pressure on the game and have already made sacrifices.
"There was somewhat of a reluctance by the players to accept a reduction in Test match payments agreed to late last year," Harris said.
"Especially in the light of what is happening in some other codes. State of Origin payments have gone up dramatically.
"Nevertheless for the good of the game they took that on board."