The Knights tabled a three-year deal for Horo worth a reported $150,000 a season, but the 23-year-old forward opted to accept an incentive-based contract with the Eels for the same duration.

It is understood that Horo will earn about $400,000 over the next three years if he establishes himself as a first-grade regular.

The bustling back-rower has played in 20 consecutive games for the Eels, including his NRL debut against West Tigers in round three.

Newcastle targeted him after previously chasing established forwards Willie Mason, Trevor Thurling, Luke O'Donnell and Jeremy Smith without success.

They gave Horo and his manager, Gavin Orr, a tour of their training facilities on Tuesday but were told Horo's preference was to stay with the Eels if they could come close to matching Newcastle's offer. It is understood Newcastle can squeeze another couple of players under their salary cap, and after missing out on Horo, their priority is a forward.

Parramatta also announced last night that they had re-signed winger Eric Grothe.

The fathers of both Grothe and Horo played for Parramatta in the 1980s and 1990s.

"We're very happy to have secured both these players for next season," Eels chief executive Paul Osborne said.

"Justin and Eric have a strong family tradition with this club that we would all like to see continue.

"Eric has been a valuable member of our NRL side for many years.

"Justin is clearly a talented player who will only improve in the future and we see him as someone who can be an important part of our forward pack for a long time."

In other player-movement news, former Knights prop Adam Woolnough has signed with Melbourne for next season.

Woolnough, 29, played 117 first-grade games for Newcastle before joining Penrith in 2008. After two years at the foot of the Blue Mountains, he walked away from the third and final season of his Penrith contract to go backpacking around the world.

The Storm also announced yesterday the signing of another experienced prop, Canberra stalwart Troy Thompson.

? Knights fullback Shannon McDonnell (hamstring) faces a fitness test today to determine if he will play against the Dragons tomorrow.