The NSW government is pushing hard to hold on to the State of Origin decider and wants it played in Newcastle.
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Deputy Premier John Barilaro said he had told Australian Rugby League Commission chairman Peter V'landys that NSW could host the game in Newcastle if health advice ruled out Sydney.
"Despite the growing risk of COVID-19 in Greater Sydney, we will not be giving up our right to host the State of Origin decider," he tweeted.
"I've spoken to @pvlandys and indicated we could host the game in Newcastle if the health advice recommends it not be held in Sydney."
Outdoor seated events in Newcastle, like in the rest of regional NSW, are limited to 50 per cent capacity under public health orders issued on Saturday and extending to July 9.
The health orders will likely limit the capacity at McDonald Jones Stadium to about 12,000.
Asked whether the Origin game would shift out of Sydney, Premier Gladys Berejiklian said on Sunday that "those conversations are happening" and it would depend on how the outbreak played out.
The ARL is due to hold a crisis meeting on Tuesday to discuss where it will play NRL games and Origin III, which could be a dead rubber if NSW win game two in Brisbane on Sunday night.
The Newcastle Herald understands that Tourism Minister Stuart Ayres has asked the ARL to delay making a call on Origin III until the middle of the week because the government is hopeful transmission rates will decline, allowing the game to be played somewhere in NSW.
Government agency Destination NSW has a contract with the ARL to stage one Origin game in the state, leaving Newcastle as a logical host in the likely event Sydney is ruled out.
The Sydney Roosters have already moved their round 16 game against Melbourne Storm to Newcastle on Thursday night.
Meanwhile, the Australian Rugby Union has moved the first Wallabies Test against France from the SCG to Brisbane on July 7.
The ARU was considering shifting the game to Newcastle but announced the new schedule on Sunday afternoon.
FROM EARLIER
State of Origin III is unlikely to be held in Sydney after the NSW government enacted a two-week lockdown in parts of the state on Saturday.
The ARL Commission will hold a crisis meeting on Tuesday where it will decide whether to play NRL games in Sydney as scheduled without crowds or relocate the matches to outside of locked-down areas.
The location of Origin III, which is set to be held on July 14 at Stadium Australia, will also be discussed.
ARLC chairman Peter V'landys confirmed to AAP that the blockbuster event is in extreme doubt considering it is set to be played just five days after the lockdown is scheduled to finish on July 9.
"Basically if you look at previous (lockdowns) they take a while to go back to normal, it takes a few weeks to reduce restrictions," he said.
"If you look at Melbourne, their lockdown finished two weeks ago and they've only just allowed 50 per cent crowds."
The NRL has acted accordingly already this year, moving the State of Origin opener from Melbourne to Townsville while Victoria was in lockdown at the start of June.
Moving the third game of the series out of Sydney would avoid playing one of the game's showpiece events in front of a reduced crowd.
That decision would be particularly crucial if it is a decider, which could attract a sell-out crowd.
Newcastle's McDonald Jones Stadium has already been raised as an option.
However, V'landys refused to assure that the match would be held in NSW despite the first two games being in Queensland.
"We'll look at all options and we have to look at the financial viability of it too," he said.
"The Townsville one was very financially beneficial for us, so we have to look at that.
"Naturally we want to minimise the losses we will incur."
Should the game be moved out of the state altogether, it would be the first time in history all three games of a series have been played outside of an Origin state.
Blues coach Brad Fittler was diplomatic when asked whether that is fair.
"We'll do whatever we've got to do," he said ahead of Sunday's game two at Suncorp Stadium in Brisbane.
"There's people doing it a lot tougher than us.
"We're getting looked after in a hotel, getting the chance of a lifetime tomorrow to play in front of a lot of people who love what we do.
"I don't see any of it as a negative. It's all just a great opportunity to fulfil great dreams and have great memories.
"Whatever the challenge is, if we're strong enough, we can do it."
On Saturday the NRL was holding high-level meetings to determine the impact of stay at home orders for residents in Greater Sydney, Central Coast, Blue Mountains and Wollongong until July 9.
Currently, 10 of the NRL's 16 teams reside in those areas.
Decisions on relocating games and bubble restrictions hinge on negotiations with Queensland and Victorian state governments.
The regular NRL competition will resume on Thursday when the Sydney Roosters host Melbourne in Newcastle, which has already been shifted from the Sydney Cricket Ground.
There are three more games scheduled for Sydney next weekend as well as the first two games of round 17, which also fall into the lockdown period.
AAP