Melbourne will be the 15th Super Rugby Team to join the competition when it expands in 2011.
SANZAR asked the former All Black Rugby World Cup-winning captain David Kirk and retired New Zealand High Court judge Barry Paterson QC to decide on bids from Australia and South Africa.
They said the Southern Kings' proposal was more advanced in business and financial planning, organisation and governance.
They were also able to point to a large playing base and had the strongest case in terms of rugby readiness.
But Kirk and Paterson said if the 15th team was in South Africa revenue from the sale of broadcasting rights to Australasian broadcasters would be reduced by $15 million to $20 million US dollars over a five-year agreement.
And they said Melbourne's location meant SANZAR would avoid additional costs of about $700,000 a year.