Australian Rugby Union chief executive Bill Pulver has revealed that Super Rugby in Australia will lose money in 2014 but they are putting together plans to address the problem.
The 2014 Super Rugby season starts later this week and Pulver has revealed that the tournament will run at a loss this year.
The Australian Rugby have had a difficult time recently but last year's British and Irish Lions tour was a big boost for the Union.
"Super Rugby will lose money in 2014, but we are putting plans together to try and address that," Pulver told ABC News.
"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 said that Super Rugby poses the biggest financial challenge for the Australian Rugby Union.
The CEO said that the ARU are anxious to begin negotiations on the new broadcast deal that will come into effect after the current one expires at the end of 2015.
However before the Australian Rugby Union and SANZAR who manage Super Rugby can start negotiating for increased broadcast rights Pulver said that Super Rugby has to 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."
Super Rugby has expanded with every broadcast re-negotiation since the early days of a 10 team format and is now a 15 team format.
Pulver also said that with just four home Tests scheduled for 2014 the ARU is headed for a difficult year.
The ARU started 2013 with a deficit of $8.3 million but thanks to the Lions tour they had a cash surplus of $10m by the end of the year.
Former Wallabies captain and now New South Wales chairman Nick Farr-Jones admitted that the Australian 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."
Australian Rugby will launch the National Rugby Championship in 2014 and will run under Super Rugby but after the Australian Provincial Rugby tournament created heavy losses for the ARU many are concerned that the new tournament will bring further losses.
Farr-Jones said that he understands the thinking behind launching the National Rugby Championship but said that due to the financial risks he was not prepared to completely give his backing for the tournament.
"I'm nervous about the affordability of the National Rugby Championship," Farr-Jones said.
Pulver however says that he is confident the new competition will succeed and that it was an important bargaining tool to offer broadcasters additional content.
With the ARU struggling financially Rugby Union Players' Association chief executive Greg Harris said that the players are aware of the difficulties and said they had 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."
Farr-Jones added that he 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?" questioned Farr-Jones.