NRL: Why Auckland Rugby League's attempt to buy the Warriors fell through

Warriors owner Eric Watson is still looking for the right buyer to take the Auckland NRL club off his hands. Photo / Photosport.

Warriors owner Eric Watson is not budging on price, while flaws in the Auckland Rugby League's funding model have also contributed to the potential sale of the NRL club falling over.

The Herald understands negotiations between the two parties broke down this week, after the ARL were unable to secure the three corporate partners needed to bring them within range of Watson's asking price which is understood to be close to $20 million.

The ARL want to buy a 55 per cent majority share in the Penrose-based club and were looking for three backers to each take a 15 per cent stake for an investment of between $2 and $3 million.

Neither party are willing to clarify why negotiations halted, when a deal looked imminent after it was reported last month that both parties had agreed on a price, while working through the due diligence process.

However, it's believed problems arose when the ARL failed to amass the required amount after struggling to find minority investors that share their vision of using club profits to rejuvenate and grow grassroots rugby league in the Auckland region.

It's understood the ARL had three potential backers in line but at least one dropped out to leave them short on the money required to complete the purchase.

Plans to establish and fund a semi-professional second-tier local competition and enhance and improve junior development pathways would be easier to fulfil if the ARL owned the Warriors outright, but are proving a hard sell to small partners expecting to gain some financial reward from their investment.

And while some investors might be willing to pass up monthly or yearly returns in the knowledge they could enjoy a windfall by selling the club in the future, it's unlikely that scenario would eventuate if the ARL were to take control of the Warriors.

Watson remains in no rush to sell and is refusing to drop his price knowing the club is virtually assured of turning a healthy profit in the next few years - particularly under the NRL's new funding model that provides clubs with an extra $3 million annually from next season.

Despite the ongoing uncertainty the club is continuing its day-to-day business and still looking to sign players for next season and beyond.

However, it's believed plans to revamp the club's football department have been delayed, after the ARL began exploring their own ideas around potential staff structure and appointments for a new Director of Football and recruitment manager.

Watson continues to talk to other interested buyers and it remains to be seen whether a new prospective owner will emerge, while the ARL remain hopeful they might be able to re-open talks again at some point.

But unless they can find backers that believe in their business model and stump up the money required, things will likely remain at a stalemate.

Meanwhile, Australia's Channel Seven report the Warriors are dark horses to sign Sydney Roosters five-eighth Luke Keary.

The 25-year-old is off-contract at the end of next season and while the Roosters have offered him a three-year extension, the club's signing of halfback Cooper Cronk on a $2 million two-year deal could impact on their ability to retain Keary or current No7 Mitchell Pearce.

Pearce is being courted by a number of clubs, including Manly, who are willing to allow five-eighth Blake Green to take up a big money three-year offer from the Warriors if they can secure a suitable replacement.

But if Pearce decides to remain at the Roosters, Keary could be looking at playing off the bench next year, and the Warriors are said to be keen on luring him to Mt Smart for 2019 and beyond.