Souths star Dane Gagai has told teammates he is returning to Newcastle on a three-year deal from next season as the latest twist in the NRL's volatile player market.
Talks between Gagai and the Knights have progressed in recent times after the Hunter club had initially held reservations over the veteran centre's asking price.
No official comment on the matter has been made by Newcastle but Rabbitohs coach Wayne Bennett revealed on Friday afternoon that Gagai had informed his teammates he would be a Knight again next season.
"He just told the team on the team bus now, on our way home from training, that he is going to Newcastle," Bennett said.
"South Sydney couldn’t offer him a long-term contract so he knew he was on the move.
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"I took him to Newcastle in 2012 when the Broncos didn’t want him so he has spent a lot of his career at Newcastle and he has family there. I think he is pretty happy about going back."
Bennett said Gagai was in career-best form and praised the Maroons and Kangaroos representative for his professionalism after being forced out of the Broncos a decade ago following a series of disciplinary breaches.
"When he left the Broncos they told him to leave. They had a whole lot of issues with him, they said, but honest to God I have never seen any of those issues," Bennett said.
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"I have never had a moment’s confrontation with him, nor has he ever been late for anything. He is a real pleasure to coach. He is always happy, always upbeat and a great competitor so he is easy to coach.
"I think he is playing his best football at the moment, actually. Each year I have been here he has got better and I think he has been really good this year. He has in other years, but he has certainly been very good this year."
Gagai had been in talks with Brisbane as well and NRL.com understands the Broncos have been informed by his camp that he has decided his future was in Newcastle.
South Sydney were reluctant to lose the 30-year-old but have long been hampered by salary cap restraints given they have several stars tied up long term.
Gagai's exit increases the likelihood of the Rabbitohs making a play for off-contract playmaker Anthony Milford, who has a good relationship with incoming coach Jason Demetriou.
"I think he would be a great acquisition for South Sydney but that is a decision not on my watch now," Bennett said.
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"It is up to the people staying and Jason and the rest of the club but I would have no hesitation if the market value was there and it would benefit South Sydney, which I believe it would do. It's just what price they can pay."
As it stands, Souths have a full top 30 roster for this season, with their interest in Milford based on him arriving in 2022 rather than as a pre-August 2 deadline signing.
"Our depth has saved us this year, we have had good depth and we have been able to play games without our Origin players and we've had other games without key players so we are confident in our depth," Bennett said.
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"We have been aiming all season for a top-four spot and we have been there since week two or week three so we have still got a bit of work to do but we are going in the right direction."
Gagai's looming return to the Hunter shapes as a coup for the Knights that follows on from the recent re-signings of Daniel and Jacob Saifiti, Kurt Mann and Hymel Hunt.
The prospect of taking a shorter-term deal at Redfern and then putting himself in the frame for a prospective fourth Queensland team had held serious appeal until the latest COVID-19 shifts clouded expansion plans.
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Gagai first established himself as a Queensland Origin regular during his first stint at Newcastle between 2012 and 2017.
He then joined Souths on a lucrative deal, forcing his way into the Australian team as well.
Gagai has played 218 Telstra Premiership games (128 of them with the Knights), 19 Origins for Queensland and seven Tests with the Kangaroos.