The Newcastle Knights are in turmoil with owner Nathan Tinkler's business group advising the NRL they would not invest further funds into the club until the current ownership dispute was resolved.
Tinkler failed to pay the salaries of at least 20 Knights staff and players on Friday and the NRL has vowed to take action.
Former billionaire Tinkler's ownership of the Knights has been in jeopardy since he was unable to secure a mandatory A$10.52 million bank guarantee by March as part of the terms of his 2011 takeover deal.
His failure to provide the guarantee also meant the Knights Members Club could buy the club back from Tinkler's Hunter Sports Group (HSG) for $1.
It's believed the Members Club has served notice of its intention to take up that option and is waiting for HSG's response.
HSG chief executive Troy Palmer said the outstanding wages would be paid next week but more funds wouldn't be forthcoming until the dispute with the Members Club was settled.
"We have been negotiating with the NRL and the Members Club for eight weeks and would have hoped the issue would have been resolved by now," HSG CEO Troy Palmer said.
"We made it clear the HSG would not invest further funds until the matter was resolved however it was important Knights' employees weren't affected during this process.
"We requested short-term assistance from the NRL for the outstanding wages however this wasn't forthcoming.
"HSG will ensure any outstanding wages are paid next week and hope the ownership dispute can be resolved immediately so the club can be adequately funded again."
NRL boss Dave Smith said the peak body would move to rectify the problem.
"The NRL will take whatever action is necessary to protect the Knights, the game and, most importantly, the players and staff as a result of these actions," the NRL said in a statement.
NRL head of club services, Tony Crawford, added: "The actions of the Tinkler-controlled Knights towards players and staff are completely unacceptable and will not be tolerated.
"The NRL has demanded that the situation is rectified immediately because there is no place in our game for this kind of behaviour.
"The NRL will be assessing all options to bring this to a resolution in the interests of the Knights, staff, our fans and the broader rugby league community."
The NRL would not speculate on what action it would take.
Newcastle boss Matt Gidley admits it's a tough situation for the Knights.
"It has been a difficult time for all involved and we hope we can reach a resolution regarding the ownership of the club as soon as possible," Gidley said.
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