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Andrew Forrest's offer of $50 million to save the Western Force was knocked back by the ARU despite such a deal being its idea, an inquiry heard.

The Australian Rugby Union's rejection of billionaire Andrew Forrest's $50 million offer to save the Western Force was a backflip that came weeks after it told him such a figure would save the club, a Senate inquiry has heard.

The revelations were made by the mining magnate's friend, former rugby professional and businessman John Welborn at a Senate hearing into the controversial axing of the Perth-based Force from Super Rugby.

If Forrest provided the money, the ARU said its board and CEO would also resign, he said.

Welborn said Forrest had called the ARU's bluff.

He and Forrest asked ARU chairman Cameron Clyne what they could to save the Force and were given a list that was supposed to be impossible to meet.

That was: underwrite the Western Force for the next eight years, fund grassroots rugby by $6 million a year for eight years and compensate the Super Rugby competition by $20 million to cover the costs in keeping the Force.

The sport was struggling financially as well as on the field in Australia, following a disastrous year for the Super Rugby teams, they were told.

Welborn said that when Forrest told them he was willing to provide $50 million: "I think they were shocked when Andrew turned up willing to make ... the largest philanthropic sporting donation of all time."

They were told it was too late and RugbyWA should have got help earlier.

The sport's financial problems and justification for dumping the Force were in the "single figure millions".

"A very short period of time later a genuine and very committed offer of tens of millions of dollar was completely discounted ... with no engagement," he said.

"That stunned me from every perspective as a rugby follower also as a fiduciary responsibility from a director's position."

ARU chairman Cameron Clyne had even lectured Forrest on the challenges of running a business with revenue declining, despite the latter's great success saving his company Fortescue when iron ore prices plunged, he said.

WA Liberal senator Linda Reynolds said during the hearing that the eastern states were sadly mistaken if they thought West Australian rugby fans would take the Force's destruction lying down.

She also grilled former Melbourne Rebels CEO Peter Leahy but he requested the media and public leave when it came to discussing the confidential financial arrangements made when the club was taken over by private owner Andrew Cox in 2015.