ARU chief executive John O'Neill says he is resigned to the Super 12 competition remaining in its current form.

The ARU has pushed for the competition to be increased to 14 teams, with expansion sides from Australia and South Africa, but O'Neill says "unreasonable" conditions being demanded by New Zealand would scuttle the proposal.

The SANZAR board is meeting tomorrow in London to make the final decision on whether the extra teams will be admitted in 2003, with the unions from Australia, South Africa and New Zealand all needing to agree to it for it to go ahead.

After an extensive report from consulting firm Accenture last July, SANZAR agreed to several recommendations including the expansion of the Super 12, New Zealand's push for Test revenue equalisation and a consistent window for inbound and outbound tours.

The ARU is furious that after it and SARFU backed New Zealand's push for an equal share of revenue from every Test it plays, the Kiwis have since imposed conditions on their support for expansion.

O'Neill said the ARU and SARFU will now issue the NZRFU with an ultimatum tomorrow - if it does not drop its conditions, they will withdraw their backing for revenue equalisation.

He said if there was no consensus tomorrow, any hopes of expansion would be killed off until after the contract with SANZAR bankroller News Limited was renegotiated at the end of 2005.

The most contentious of New Zealand's conditions was that Australia asked News Limited to drop one match from the five home Tests each of the SANZAR unions are contractually obliged to stage annually.

O'Neill denied New Zealand's claim that Australia had not approached News Limited but said the proposal was never going to be agreed to anyway.

"If you're taking a sinister view, we went to the trouble of getting the Accenture report done and all things in that that were important to New Zealand, most significantly the equalisation of Test revenues, have been progressed, presented to the IRB and actioned upon," O'Neill said.

"But those of interest to Australia and South Africa, namely the expansion of Super 12, have languished and I ask in the rhetorical, why?

"It's a furphy to say we haven't approached News Limited. We have and the answer was predictable. Any fool would have known News Limited would not drop three Tests from across the three countries."

Equalisation of Test revenue is a major concern for New Zealand which considers it gets a raw deal out of playing to 70,000-80,000 capacity crowds in the northern hemisphere and Australia without earning anything from the All Blacks' pulling power, while it only has small venues at home.

The issue, which does not have the same weight for Australia and South Africa as they have their own large venues, had very little chance of receiving any support from the northern hemisphere.

Meanwhile David Kirk, the man who led the All Blacks to the 1987 World Cup, has backed Australia's push for a fourth team in the southern hemisphere competition.

"Two extra Super 12 teams, I think is good for the competition, for the development of rugby particularly in South Africa and Australia," Kirk said.

"But I can fully understand why New Zealand would want to make sure that the priorities they have are supported and continue to be pursued by Australia and South Africa particularly regarding the northern hemisphere.

"But there shouldn't be too much issue about dividing up the cake between the three down here. It's better that the three down here show an agreed agenda promoting all three when it comes to these matters."

Kirk added that if the board of the three countries doesn't expand the competition and unite against their northern hemisphere counterparts it will hurt their Test equalisation plan.

"My fundamental view is that in the end it is in everyone's interest to keep the game progressing down here," he said. "There will be differences of opinion but grown up people should find compromises and keep moving ahead.

"A stand off with people saying `if you won't I won't are not doing fans or players any help at all. All three are at a disadvantage in raising revenue compared to the northern hemisphere."

Kirk also said New Zealand would be the biggest loser if the Test equalisation plan fell through.

"New Zealand is in a unique situation that it has got one of the strongest rugby playing nations in the world but has a very small economic and financial base," he said.

"At the moment the All Blacks are touring the world and raising millions and millions of pounds for northern hemisphere countries by being there and seeing very little reward for that.

"Australia is in the same situation but to a much lesser extent, filling up Stadium Australia probably makes two or three times net profit for the ARU than filling up Carisbrook."