Group Seven operations manager Peter Mehl has issued a formal apology following a comment he made at the league's recent junior annual general meeting.
During the meeting, attended by close to 40 club representatives, Mehl made an off the cuff phrase 'n----r in the woodpile', which offended numerous people in the room.
It even saw one club representative storm out of the meeting at the Kiama Leagues Club on October 29.
In an apology letter sent to representatives from all Group Seven clubs, Mehl said.
"I extend my sincerest apologies for the bad choice of words I used last night at the annual general meeting.
"I made an off the cuff comment that was not intended to offend any person or community.
"It was not my intention to cause anyone distress and I immediately apologised, however, I believe that I need to make a formal apology to everyone present.
"I am aware that this comment offends and I can't do any more than sincerely apologise and ensure that I never make any such remarks in the future.
"Please forgive me for making the people feel uncomfortable with my comment."
Since then, one of the clubs in attendance has sent in a formal complaint to the NSWRL on the derogatory comment.
"NSWRL has been made aware of an inappropriate comment made at a junior rugby league meeting on Tuesday, October 29," NSWRL region manager (Southern) Kevin Felgate said.
"Over the weekend, NSWRL received the official complaint from a member of a Group Seven club in relation to the incident - which saw Peter Mehl send out an apology to all affiliated junior clubs.
"As such, we've called a meeting on Tuesday, involving myself, St George Illawarra CEO Brian Johnston, Peter Mehl and another Group Seven director, to better understand the context of the situation and address the complaint.
"In general, our game [rugby league] has a strong stance on any comments that offend any particular group or element of the sport.
"As a game, we are very clear and inclusive - considerable work has been done to make that message clear to the public and all associated with rugby league.
"This is a timely reminder we don't tolerate any inappropriate comments."
In recent years, Group Seven has done a sensational job of promoting Aboriginal athletes on the field, including Indigenous rounds and jerseys by clubs such as Nowra-Bomaderry, Milton-Ulladulla, Wreck Bay and Mount Warrigal, as well as holding the Indigenous All-Stars verse Group Seven under 23s pre-season fixture the past two years.