Australian Rugby League Commission chair Peter V’Landys said he is prepared to abandon the prospect of a NRL team from Papua New Guinea if the federal government doesn’t improve its offer of support.

The NRL is considering expanding the men’s competition to 18 teams in 2027, and a team from PNG has been championed by the federal government as a way to bring the region closer amidst ”competitive tension”.

At Friday’s announcement of Magic Round staying in Brisbane until 2027, V’Landys said he was prepared to walk away from negotiations with the federal government around PNG. “You play poker with me, we don’t bluff,” he said.

“It is no done deal,” V’landys said on Friday. “We’ve got a few negotiating points that we haven’t quite got over and if we don’t get over them, unfortunately it won’t happen. It is D-Day today.”

Rugby league is one of several sports the Australian government has arrangements with to support diplomacy in the Pacific.

Representatives from the NRL met the minister for the pacific, Pat Conroy, on Friday afternoon in Brisbane, after Conroy had separate met officials from Rugby Australia and Queensland Rugby.

The government also announced on Friday that the Queensland Reds’ men’s and women’s rugby union sides would play matches in Tonga under the PacificAus Sports program.

Prior to the meeting with the NRL, Conroy declined to comment on V’Landys’s public statements, but said “when I negotiate with people I do it behind closed doors”.

“I’m announcing right now a deepening of our partnership with rugby union so it’s self evident that the Australian government has a number of options about who we partner with,” he said.

The NRL has put forward a strategy for rugby league in the Pacific, worth $600m over 10 years, which also includes the PNG franchise. But a PNG team is likely to require tens of millions of dollars of Australian taxpayer support each year.

V’Landys confirmed there had been sticking points in negotiations, and he described them as “commercial” in nature.

“What we want to do is have [the team] based in Papua New Guinea and that’s important, so you need to have good facilities there, you need to have good accommodation there, and all those things are on the table at the moment,” he said.

Prime minister Anthony Albanese has celebrated the close relationship Australia shares with its northern neighbour over rugby league. But he has previously indicated deciding on whether to expand to PNG was up to the NRL.

“It, of course, is a decision for the NRL, it’s not a decision for government,” Albanese said last year. “But it is something that could be, in terms of Australia’s relationship with the region, we know we have a bit of competitive tension in the region and engagement, if you like, in soft diplomacy, showing the relationship between Australia and our neighbours, that is so important.”

The PNG franchise itself is likely to attract strong fan support and sponsorship interest from large local resources companies. However an 18th-team based in Port Moresby would also significantly increase costs related to logistics, accommodation, travel and security that would be borne by the NRL.

The 17 existing clubs need to sign off on any expansion side, and the NRL provided an update on discussions with the government at a meeting of club chief executives in Brisbane on Thursday.

The NRL is seeking to secure an agreement from the government before formally taking any PNG proposal to clubs.

Other bids from Western Australia and New Zealand have emerged, and provide options with less risk for the NRL.

V’Landys also said on Friday he is seeking from the government tax discounts for players who choose to play in Port Moresby.

“The important thing for us is having those players there to attract the kids to go to school,” he said. “And that’s the prime objective of this thing, is to help the communities in Papua New Guinea”.

Conroy said: “Ultimately, it’s got to work for the Australian government and taxpayers, it’s got to work for the PNG government, it’s also got to work for the NRL, but we take value for money and taxpayers dollars incredibly seriously.”