UPDATE 1-Rugby-Melbourne awarded 15th Super rugby team

* Melbourne wins bid for 15th spot

* South African team would have reduced revenue

(Adds quotes, details)

MELBOURNE, Nov 12 (Reuters) - Melbourne has been awarded the franchise for the 15th Super rugby team when the competition expands in 2011, the competition's governing body said on Thursday.

The southern Australian city was chosen by independent arbitrators after the board of SANZAR (South Africa New Zealand Australia Rugby) failed to reach an agreement last month between it and a competing bid from South Africa's Southern Kings.

Former World Cup winning captain David Kirk and retired New Zealand High Court judge Barry Paterson conducted the review of each bid before deciding on Melbourne.

The existing Super 14 competition will be reorganised along a conference system with five teams now in each of the three countries.

SANZAR said a 15th Super rugby team in South Africa would have reduced broadcasting revenue by between US$15-20 million over the term of a contract.

"The Melbourne application provided considerably greater commercial benefit...than the Southern Kings application," SANZAR said in a statement.