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In a statement, NZR chief executive Mark Robinson announced a plan which would effectively cut ties with Super Rugby and Sanzaar, the controlling body for the competition.
The Herald understands Sanzaar would still control the Rugby Championship - a test series contested on a home and away basis between the All Blacks, Wallabies, Springboks and Argentina.
This follows after the findings of the three-month investigation Aratipu review into the game.
Robinson said the NZR Board had approved a number of key recommendations aimed at establishing a new competition in 2021 that "fans would love, that was competitive on the field, that players wanted to play in and that drove commercial growth that could be reinvested back into our game.
"Coming on the back of Covid-19 and its impact on future competitions, the NZR Board has committed to establishing a new professional team competition in 2021. We have also been heartened by the success of Super Rugby Aotearoa.
"The focus is now on confirming the licenses for New Zealand's five current Super Rugby clubs and that work is now underway. We have highly valued the partnership with these five clubs over the last 25 years of the competition and want that to continue," he said.
The Herald understands NZR instead plan to keep the format of the hugely popular all-Kiwi Super Rugby Aotearoa intact, but will invite Rugby Australia to tender to be a part of the competition.
NZR would then decide how many, if any, Australian teams it deems viable of playing in the competition - based on factors including player numbers and welfare and financial strength.
NZR would prefer an eight-to-ten team competition.
"We will be working with Rugby Australia to seek expressions of interest from their current Super clubs and other interested parties to join the competition and that work will begin in earnest. We are excited and interested to see what our Australian neighbours will bring to this competition," Robinson said.
At least one Pacific Island team - believed to be the new Hawaiian-based outfit led by a consortium of former All Blacks including Jerome Kaino, Joe Rokocoko, John Afoa, Benson Stanley, Anthony Tuitavake and Ben Atiga – will be part of the new competition.
"There is a huge desire to have a Pasifika team involved which we think will be massive for the competition, popular with fans and is a priority for us," Robinson said.
"As we know, our Pacific nations and Pasifika players in New Zealand have added so much to the rich history of rugby in Oceania and our game here in New Zealand. To have a team that would provide an additional pathway for Pasifika players to perform on the world stage would be hugely exciting."
Robinson said criteria would be developed as part of the expressions of interest (EOI) process. The EOI process will begin next week and NZR hopes to have it completed by the end of next month.
"We want teams that are competitive and that fans will want to watch go head to head, week in, week out."
Robinson said NZR would also be consulting with Sanzaar as part of the ongoing work on establishing the competition.
Sanzaar was formed in 1995, shortly after rugby's move to professionalism, with the first Super 12 competition taking place in 1996.
The body was renamed to Sanzaar in 2015, with the inclusion of Argentina.