THE SCOTSMAN REPORTS
GARETH BLACK
THE row between the Scottish Rugby Union and Edinburgh Rugby continued yesterday with threat and counter-threat.

One report suggested - through the usual "senior sources" at Murrayfield - that the SRU will try to regain control of Edinburgh by claiming that the club's owners are in breach of contractual obligations, thus invalidating the existing agreement between the two sides.

Another report - confirmed by Edinburgh owner Bob Carruthers - said that Edinburgh are preparing a writ for an alleged shortfall in sums which they say are owed by the SRU.

The SRU strategy of regaining control of Edinburgh from Carruthers had been hinted at last week in off-the-record briefings to journalists, and it strengthens the impression that the governing body no longer has any desire to see the private investors - in other words, its business partners - succeed at Edinburgh.

While the report suggested that there have been contractual breaches over issues such as player release and IRB regulations - issues which seemed to have been finally settled at last Thursday's disciplinary hearing - there was also mention, peculiarly, of other areas of potential breach of contract, despite those supposed breaches not having yet happened.

It was suggested that proving breach of contract would bring an end to the SRU's obligation to provide £1.1million of annual funding to the Edinburgh team, and allow the union to claim back previous payments on the basis that the funding is a loan dependent on the club's performance in certain areas.

The union's threat is understood to be a counter strategy following Carruthers' declaration that, if necessary, he will take legal action to pursue payments that he claims the SRU defaulted over.

It emerged yesterday that the payment shortfall, reported to be around £200,000, allegedly occurred because Edinburgh were charged by the SRU for the provision of backroom staff in the early months of the professional team being run by Carruthers and his board of directors.

A letter written last September by Graeme Stirling, the managing director of Edinburgh who resigned ten days ago, to Eamon Hegarty, the SRU's finance director who was then the union's representative on the Edinburgh board, was published in Scotland On Sunday. It said: "I have still not received the monies withheld by the SRU against sums due to Edinburgh Rugby in respect of participation in the Heineken Cup and Magners League competitions. This money is due to Edinburgh Rugby under a legally binding agreement with the SRU.

"In response to your schedule of proposed recharges received today, I have attached our response setting out our position in relation to the various payments. As a fellow director, you will no doubt appreciate the importance of these payments to Edinburgh Rugby Limited and how damaging your action is to the company.

"As you know, the club only participates in two tournaments. We were understandably dismayed, therefore, to find that the SRU had defaulted on both of these payments. Your subsequent claim that the SRU now intends to withhold a substantial portion of the outstanding payments without reference to us is deeply disturbing, particularly as you have been party to the business plan since day one.

"It is astonishing to me that I should have to write in these terms to a fellow director of the company."

Hegarty resigned as a director of Edinburgh that same month.

Carruthers still wishes to enter mediation with the SRU in an attempt to reach resolution, and seemed to be moving in that direction last week when the union was forced into a climbdown that ensured the SRU would at least consider mediation. But over the weekend "senior sources" at the union continued to brief journalists that they are not interested in mediation.

Meanwhile, in a rare on-the-record remark, the SRU confirmed that it has received "serious" correspondence from Edinburgh which could influence its decision on whether or not to proceed with mediation.

"We have received letters which have a serious content and these have been referred to our own lawyers," said SRU chief executive Gordon McKie. "The request for mediation has also been referred to our lawyers against the background of the previous correspondence."

This article was posted on 16-Jul-2007, 07:33 by Hugh Barrow.