Key Points:

Despite figures showing the Australian Rugby Championship could lose A$8 million ($9.19 million) in its first two years, the players' union said the decision to dump the competition was premature.

After just one season, and a financial shortfall of A$4.7 million, the Australian Rugby Union yesterday terminated the second-tier competition, saying it was the only financially responsible thing to do.

Despite state unions reluctantly accepting the decision, Rugby Union Players' Association chief executive Tony Dempsey said the ARU had pulled the pin too early - and could have found the money by cutting other areas of rugby red tape.

"We can't help but feel this decision is premature," Dempsey said.

"We understand the need to be fiscally responsible. However there has existed since October ... the opportunity to embark upon a rationalisation of the key development programmes that exist in Australian rugby.

"These include the Australian 7s, Australia A, premier rugby, national talent squad and state union academy programmes.

"And given that ARC was not due to commence until August next year, such a process of rationalisation is not unreasonable."

Dempsey also said the opinion of players had been ignored.

"Survey results and general feedback from the ARC's key participants - the players - was overwhelmingly in support of the competition's values and achievements," Dempsey said.

Saying the A$4.7 million first year loss was A$2 million over budget, ARU deputy chief executive Matt Carroll said a tough decision was needed.

"Strong leadership is paramount to the success of our game and ... continuing with the ARC was considered to be an untenable financial risk for the ARU and rugby as a whole," Carroll said.

But senior players, including Wallaby and Waratah Adam Freier, said they were disappointed and frustrated at the decision.

"The future generation of Wallabies and Super 14 players benefited enormously from this tournament," Freier said.

"The cost of the loss of player development opportunities is hard to measure.

"But we believe the players should have had greater input into such a decision, given its impact on our ability to develop younger players."

David Croft, Queensland Red and captain of the now defunct Melbourne Rebels, said Australian rugby had been crying out for a stepping stone competition between club competitions and the Super 14.

"There are many long-term important benefits of this competition that cannot be recorded on a balance sheet," Croft said.

"The players and I all bought into this concept and built teams and established cultures that we can all be proud of. It doesn't seem right for it to be that easily taken away."

NSW Rugby chairman Arvid Petersen said the demise of the ARC was disappointing but inevitable.

"Although the ARC produced some wonderful results on the field ... NSW is exposed more than anyone with three teams," Petersen said.

Rugby WA chairman Peter O'Meara said he hoped the concept would not be abandoned.

"The players want it, the fans want it and Australian rugby needs it," O'Meara said.

Carroll said the ARU was still committed to another high-quality domestic competition in Australia.

- AAP