At Keirle Park in Manly about 100 five-year-olds were drawn from four schools in the area – three public and one Catholic – after a term-long program gave them their first taste of rugby. Waratahs stars and local heroes Cam Clark and Matt Lucas were there, too, plus a small army of Manly Roos volunteers, willing to herd cats for two hours – as one club official put it – if it meant converting children into lifelong lovers and players of the game they play in heaven.

The Keirle Park kids, plus the 300-odd who packed out Blackman Park in Lane Cove, are at the forefront of a push into new territories for Australian rugby. Split evenly between boys and girls, they are the tiny flicker of hope the Australian and NSW rugby unions are desperate to fan and grow through new programs called easily marketable things such as "Game On" (for primary school students) and "Viva7s" (a non-contact version for all ages).

The people running the programs – either volunteers or modestly paid development officers – will tell you they're working. The first year the Manly Roos and the NSWRU ran Game On it translated to a 20 per cent jump in club registrations the following season.

And yet a cold war further up the food chain between the ARU and Shute Shield clubs threatens to snuff out these flickers of progress across the state and damage the code for generations to come.

"We don't see the need to play any particularly prominent role with the ARU; they've developed their strategic plan for their game, and that is a plan which focuses almost universally on elite and professional rugby, and that's where the vast majority of the money is going," newly elected Sydney Rugby Union president David Begg said on Wednesday in response to a question from Fairfax Media about the relationship between the premier clubs and head office. "From our perspective, we see a significant degree of autonomy coming from that and we're going to make the most of that autonomy."

It is a coolly detached statement that should have sent chills down the spine of ARU chief Bill Pulver and chairman Cameron Clyne.

Begg's words are just the beginning. Within a week or so, the SRU will announce a 2017 Shute Shield draw that pits its grand final, attended by 12,000 fans this year and broadcast live on free-to-air television, against the opening round of the National Rugby Championship, the ARU's third-tier competition on Fox Sports.

The calendar change is a pointed reclamation of cherished territory by the premier rugby clubs, who had watched their season progressively eaten into by the NRC.

Begg stressed he was not an NRC detractor, nor did he want to pick a fight with the ARU. But with trenchant ARU critic Brett Papworth as his vice president, the message is clear: having been forcibly liberated from the ARU funding trough, the clubs are taking their new-found freedom seriously.

VIVA7s: Young girls take part in a game of non-contact rugby. Photo: Karen Watson

"It's fair to say the game is not in rude health," Begg said.

"The game has some pockets of great growth: it's doing really well in country NSW, obviously the women's sevens [success] was a great boon to women's rugby and to the whole rugby community in Australia.

"However, we view the Shute Shield as still being the breadbasket of Australian rugby. If you look at player development, at Wallabies playing in run-on sides, and you add the Brisbane club competition to the Shute Shield, we still contribute to the development of nearly every Wallaby. Our health, in part, must be a barometer of the health of Australian rugby more generally."

Pulver maintains he is a rusted-on club rugby supporter who, through the ARU's strategic plan and programs such as Game On and Viva7s, is giving the clubs the chance to grab a foothold in Australia's fractured new sporting landscape, in which fewer and fewer people are interested in playing structured team sports.

"The best way to change the economics of our game is to grow participation and, ultimately, to grow the game you have to bring kids between the ages of seven and 14 into the game," Pulver said.

"The average rugby participant spends roughly $1000 a year on the game, through registration, memberships at their Super Rugby club, buying tickets to Test matches, or merchandise and new gear. Girls bring in the same $1000 that boys bring in. Growth there is the key. Then at the other end, if you can create successful national teams, that helps grow participation as well."

First taste: The program has introduced rugby to young kids. Photo: Karen Watson

Pulver and his strategists are correct. There isn't a major code in Australia that isn't targeting girls at grassroots level or looking seriously at providing a professional pathway at the other end. In the latter category, the ARU is leading the charge with a year-round professional women's sevens program and an Olympic gold medal-winning national team to boot. Rugby's offering to girls who want to play footy for a living – an international sevens circuit and the chance to go the Olympics – puts the AFL's trumpeted seven-game competition to shame.

The ARU's problem – and it's a big one – is that no one is listening any more. Pulver took care of that in January when he declared to club presidents: "I'm not making any money available for the Sydney clubs to piss it up against the wall."

He was referring specifically to the practice of paying players that was rampant at the time among the amateur Shute Shield clubs. His principles might have been in the right place, but his comments were the final straw for clubs already bristling at the prospect of life without, albeit limited, direct ARU funding. A near-complete absence of references to the Shute Shield in the strategic plan released a few months later compounded their humiliation.

Now, with Begg and a new generation of club presidents in charge at the SRU, an easing of the strained relationship seems unlikely. And it could kill the game just as ARU strategists might have picked a winner.

Given the game a boost: Australia's gold-medal winning rugby sevens team. Photo: Joe Armao

Why? Because strategy is useless if Pulver can't generate the goodwill to execute it among the clubs and state unions. After all, it was Manly Roos mums and dads who went to those four local schools and convinced them to choose rugby over every other code their year 1 students could have played this term. They went armed with an ARU product, to be run on the ground by NSWRU development officers and funded by the Australian Sports Commission under the Sporting Schools banner. It was volunteers, who have nothing to "piss up against a wall", who pulled it all together.

Then, if the boys and girls who join the Manly Roos next season do fall for rugby and dream of becoming Wallabies, Waratahs and Olympic champion Pearls, they will need senior clubs to play for.

The ARU must add some emotional intelligence to its strategy, which is why a cold war is the worst possible outcome for rugby.