A previous application by Nines creators Duco Events for $3 million over three years to help get the event off the ground was also rejected.
Duco's David Higgins said he had never received an adequate explanation of why the company's application failed.
An MEDF briefing paper seen by the Weekend Herald indicates both applications were rejected because:
• The timing of the Nines would have had a negative impact on the Wellington Sevens.
• Auckland already received a disproportionate level of MEDF funding and investing in the Nines would only exacerbate that.
• The Nines would go ahead regardless of whether the MEDF provided funding.
• Prize money paid to the 15 Australian NRL clubs would go overseas.
• The Nines had already received a significant level of public money through Ateed's investment.
• The Nines was projected to make a profit and any MEDF investment would simply boost its profit margins.
Economic Development Minister Stephen Joyce said the sold-out Auckland Nines tournament did not affect the Wellington Sevens and denied that the advice by ministry officials that it would do so had been a factor in his decision to reject funding for the Auckland event.
"[The Nines] didn't have any impact [on the sevens] in our view," Mr Joyce said. "It wouldn't have made any difference to me."
That contradicted advice Mr Joyce received in an assessment briefing, which said 28 per cent of the Wellington Sevens crowd were Aucklanders.
"If the NRL Auckland Nines is successful in delivering a shortened format 'rugby festival' that competes 'head on' with Hertz Sevens, these 'Aucklanders' might choose to stay in town rather than travel to the sevens, potentially undermining the viability of the Hertz Sevens over the medium to long term," the briefing says.
Mr Joyce also said the fact a large amount of the contestable fund already went to Auckland events - another concern raised by MEDF officials - did not influence his decision.
"There is no particular desire to either concentrate on Auckland or not concentrate on Auckland," he said. "People would be reading way too much into it if they thought so."
Ateed's complaint to MEDF alleged a "lack of commitment to a genuine partnership approach" and suggested the major-events strategies of the country's biggest city and central Government were "misaligned".
Ateed chief executive Brett O'Riley said the reasons its funding application was rejected were revealed at subsequent meetings; however, he did not agree with them.
"No, but there will always be times where we have to beg to disagree," Mr O'Riley said.
He believed a "breakdown in process" had led to the dispute between the organisations.
"The relationship is fine. It's not unusual for there to be tension between local government and central Government because we have different goals and different ways of approaching it.
"While there was some frustration and disappointment at the time, we work really closely with them.
"They partner with us on many major events and this was probably one of the few that they haven't decided to support, which is probably why it was a bit more surprising."
Mr Joyce said he stood by the decision to decline Ateed's application. "There is no rule that says just because Ateed does something the taxpayer should do something as well."
