The ARU has invited private investors to become stakeholders in the four domestic Super 14 franchises in a radical bid to boost Australian rugby's ailing coffers.

After confirming a disastrous $8.4 million loss last year - due largely to the spectacular, $5.5 million failure of the Australian Rugby Championship - ARU chief John O'Neill and chairman Peter McGrath said the private equity proposal was essential if the sport was to keep up with its three rival football codes.

O'Neill argued that rugby union - which only moved into a professional era in 1996 - was merely catching up with the NRL and AFL, which each enjoy financial support from licensed clubs and private benefactors, and soccer's A-League, which he said attracted some $40 million in private equity when it was established three years ago.

"There's no more competitive sporting landscape than the Australian one," O'Neill said.

"And when you add in the international competition, particularly from England and France, New Zealand and South Africa, you can understand that the competition isn't going to go away.

"It's going to become even tougher."

The initiative received the tick of approval from the NSW Waratahs, Queensland Reds and the Rugby Union Players' Association, with all three organisations issuing statements of support.

"If we now want to improve our competitive position against other major football codes, we need to continue our advancements," McGrath said.

"Private equity is not a dirty word. When managed correctly, it has been a major contributor to the success of various sports in Australia and around the world."

O'Neill also reaffirmed the ARU's intention to push for an expanded Super rugby competition, which would also dramatically increase revenue.

But most attention centred on the potential for private investment in the NSW Waratahs, Brumbies, Queensland Reds and Western Force which, until Thursday, had been strictly taboo.

O'Neill, though, insisted the ARU was "not selling off the franchises".

"We're introducing the opportunity for private equity into the professional end of the game on a nationally controlled and regulated basis ... on a basis yet to be determined," he said.

"We're not selling the farm and the tail won't wag the dog."

Under the current arrangement, all four franchises receive the same amount of funding from the ARU, although there are additional "top-ups" for Wallabies.

Private equity could have the potential to create an uneven playing field, with some franchises wealthier than others.

But O'Neill was reluctant to discuss the future introduction of a salary cap, as used in the NRL.

"I wouldn't want to get into a level of detail about salary caps and drafts and other mechanisms that operate, say, in the AFL and NRL," he said.

"Today's more about confirming that the ARU has changed its policy. It's policy since 1996 has been to prohibit private equity."

While O'Neill said Australian rugby at the professional level could continue surviving without private investors, he conceded "we would have to have more modest ambitions".

O'Neill said the ARU was also particularly keen for a 26-week Super rugby tournament - possibly including a fifth Australian franchise or a Japanese team - "to give our elite players more opportunity to play the game".

"Most of our professionally contracted players are under utilised," O'Neill said. "Last year, they averaged 16 games per player."

In an expanded tournament, O'Neill proposes that the 15 teams play each other once and then the five sides from each of Australia, New Zealand and South Africa contest a series of local derbies.

The tournament, proposed to run from March through to early September, would then climax with a top six to top eight final series and coincide with the NRL and AFL playoffs.

O'Neill suggested tour matches involving teams from other Test-playing nations could be staged mid-week and that the Tri Nations - or possibly another international series also including Argentina - could be held after the Super tournament.

O'Neill acknowledged that any changes to the current format require the agreement of Australia's SANZAR partners New Zealand and South Africa.

"We will continue our dialogue with them with a greater sense of urgency," he said.

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