Rugby Australia (RA) says it “did not back down” by reaching a financial settlement with player Israel Folau after he was sacked for making homophobic comments.
The ex-Wallabies star sued RA for A$14m (£7.4m; $9.5m) after his contract was terminated in May.
Folau, a Christian, argued he was a victim of religious discrimination.
He was sacked for saying “hell awaits” gay people, after previously being warned over his social media posts.
The parties settled for an undisclosed amount, according to a joint statement on Wednesday.
“We had to make a decision that was right for rugby in this country,” RA chief Raelene Castle said at a news conference in Sydney.
“We stick to our values that inclusiveness is absolutely core to rugby.”
She said taking the matter to court was not in the interests of the game and the eventual decision was “more cost-effective for us”.
“So we made a decision that gave us cost certainty that put us in the best financial decision entering the new year in a positive way,” she said.
She did not rule out Folau playing Super Rugby again, but indicated it would be unlikely.
“Never say never, because that would be crazy,” she said when pressed by reporters on the issue.
“I think it’s clear to say our values are not aligned and the expectations that Rugby Australia would have of Israel coming back into the sport would not be acceptable.
“At the end of the day, we have parted ways. He’s been terminated since April,” she said when asked if he could play for an Australian club in the southern hemisphere tournament under the settlement.
In a statement from both parties, the 30-year-old full-back said he had not intended to harm or offend people when he posted a meme on social media that said hell awaits “drunks, homosexuals, adulterers” and other groups.
Both parties apologised for “any hurt or harm caused”.
The settlement came as an abrupt conclusion to a months-long dispute. Just last week, Folau had upped his demands for compensation.
Previously one of the nation’s highest-paid athletes, he had sought both monetary compensation and a return to the national side.
The row had been closely followed in Australia, where it sparked national debate about free speech and discrimination.
Folau had been widely supported by Christian lobby groups, but he has also been widely condemned for his anti-gay and anti-transgender comments.