From four to three: the Welsh Rugby Union’s bid to save Welsh rugby

Welsh rugby stands at a crossroads as the Welsh Rugby Union (WRU) moves to reshape the professional game, following a comprehensive consultation process. In late 2025, the WRU Board announced a plan to reduce the number of professional men’s clubs from four to three, revising an earlier, more radical two-club proposal. The changes are intended to address persistent financial and team performance challenges, with the aim of concentrating talent, improving competitiveness, and ensuring long-term sustainability for both men’s and women’s rugby in Wales [1]. 

Under the new proposal, one side will be based in east Wales, where the Dragons currently are, another would be based in Cardiff, and the third team would be based in west Wales, where the Scarlets and Ospreys are. It has not yet been agreed which clubs will survive under the new structure but given the geographical proximity of the suggested teams, with both the Scarlets and Ospreys in west Wales, it appears the two would either need to merge or face the risk of extinction. 

This approach to reducing the number of teams in the top tier of Welsh Rugby is not without precedent. In 2003, Welsh Rugby clubs voted to focus its efforts into four regions, following concerns that player talent and finances were spread too thinly at the time [2]. That said, the WRU’s latest proposal has sparked concerns that reducing the number of teams any further would reduce the number of playing opportunities for Welsh qualified players and alienate fans by removing fixtures between (as planned) the Scarlets and Ospreys [3].  

In simple terms, the WRU proposes a new funding model under the new ‘Professional Rugby Agreement 2025’ (PRA25). The PRA 25 would fund all or most of the clubs’ rugby operations, in exchange for the WRU asserting control over all rugby-related matters, including the contracting of players, coaches, and support staff. This unified approach has drawn similarities to the model used by the Irish Rugby Football Union. However, the WRU’s new approach has drawn criticism from multiple angles from the clubs and a range of rugby stakeholders.

The WRU’s move comes after a period of intense consultation, described as the most extensive in Welsh sporting history, involving over 7,000 responses from the public and more than 30 meetings with stakeholders [4]. The WRU’s most recent annual report shows the governing body made a loss of £8.5m for the year ending June 2025 [5]. The WRU’s total revenue for that year was £106.1m, a managed increase from the previous year, but the group’s capital and reserves fell to £27.6m [6]. Moreover, the WRU remains highly leveraged, with net debt of £124.1m [7]. Unfortunately, this expenditure has not translated into successes on the pitch. Both the senior men’s and women’s teams endured winless Six Nations campaigns in the 2025 season, and the men’s team set an unwanted record of 18 consecutive defeats before finally beating Japan in the summer of 2025.

A key driver for reform is the unsustainable financial model underpinning the four professional clubs. The WRU’s own analysis shows that, without WRU and club owner funding, the professional clubs are not viable businesses, with commercial and competition income covering only about half of costs [8]. Since 2019, overheads for the regions have risen faster than their revenues, and the WRU’s annual funding commitments have become increasingly difficult to sustain. The WRU distributed £121m to the four regions over five years under the previous funding model, and the new proposals would see per-team budgets rise from £6.4m to £7.8m - but only for three clubs. This restructuring is expected to release up to £28m over five years for investment in pathways, academies, and the women’s game [9]. This is part of a commitment made by the WRU to provide an additional £40m investment across five years in Welsh Rugby from the elite level to the pathways [10]. 

All four of the men’s professional clubs have issued statements in response to the ongoing consultation. These are each discussed in turn. 

• Scarlets: The Scarlets Board is confident the club will continue to play a central role in west Wales from its home at Parc y Scarlets. The Scarlets were the last Welsh region to win a league title in 2016/17 and boast an impressive 9-3 win against the All Blacks in 1972. The club called on everyone connected with the region to embrace the opportunity for sustainable, successful professional rugby, while recognising the scale of change. The Scarlets have stressed the need for reform that protects heritage and community connections, highlighting their two league titles, their player development role (34% of Wales internationals in the past decade), and their £17m annual economic contribution to the local economy [11].  
• Ospreys: In a notably more succinct statement made by the club’s owners [12], the Ospreys reaffirmed they are the most successful region in Wales having won more league titles, produced players who’ve won more Welsh caps and been selected for more British and Irish Lions tours than any other region. The club also stated their intention to continue engaging with the WRU to find a solution that works for both the region and Welsh Rugby as a whole and are considering all options available to them. The club recently obtained planning permission to redevelop the St Helen’s ground which gives them the option to relocate from the Swansea.com Stadium, where they’re currently based.
• Cardiff Rugby: Cardiff Rugby welcomed the assurance that one of the three professional licences would be based in the capital. They reiterated their commitment to remaining at the Arms Park, while recognising the significant change and uncertainty for colleagues across Welsh rugby. Cardiff also emphasised the need for collaborative work with the WRU as they approach their 150th anniversary season [13]. 
• Dragons RFC: The Dragons have issued two statements in response to the consultation. In October, the club welcomed the WRU’s commitment to retaining elite rugby in Gwent (where the club is based) but they also warned “It is essential that clubs retain control of rugby decisions; this will ensure a sustainable domestic model which helps build a successful national team. We will continue engaging with the WRU to make sure that the structures and governance of the game are made acceptable [14].”  However, on 6 November 2025 they reportedly walked away from discussions with the WRU after the Union insisted on keeping central control over all rugby matters, including coaching, player recruitment, and selection [15].  The Dragons rejected new financial commitments demanded by the WRU and stated they would not agree to any structure stripping the club of control over on-field matters, calling for the WRU to reconsider its governance and financial proposals. The club’s approach is not surprising given that the Dragons was purchased from the WRU in 2023 by a consortium of private investors which acquired the club under the pretence they would take full ownership of the club and its day to day operations, including rugby-related matters [16].  Indeed, this stance is likely shared by the Scarlets and Ospreys which are also privately owned.

In parallel to the ongoing consultation, the Scarlets and Ospreys are taking legal action against the WRU in relation to the WRU's acquisition of Cardiff Rugby. In April 2025, the WRU intervened to support Cardiff Rugby after it went into administration [17]. The WRU bought the club for £3.8m and created a new entity named Cardiff Rugby Club Limited, sitting as a wholly owned subsidiary of the WRU [18]. 

The Scarlets and Ospreys argue the WRU's purchase of Cardiff, and the subsequent operation of Cardiff Rugby as a wholly-owned subsidiary, may constitute an anti-competitive act by the governing body, which is also the regulator and funder of the professional game in Wales [19]. Their legal position is that by directly owning and controlling one of the professional clubs, the WRU could be distorting the market and competition between the regions, potentially breaching UK and EU competition law principles that require a level playing field between market participants. The challenge brought by both regions is grounded in the belief that the WRU's dual role as both regulator and owner of a club could give Cardiff Rugby an unfair advantage in funding, governance, and decision-making processes affecting professional rugby in Wales – including the ongoing consultation process. 

The WRU, for its part, has stated that it hopes the arbitration process regarding this legal challenge can be paused until the ongoing consultation process on the future structure of elite rugby in Wales is concluded. The governing body is also confident that the consultation process will curtail any potential challenge under competition law [20]. For instance, in 2004 the WRU acquired a fifth (and now defunct) region known as the Celtic Warriors under a similar set of circumstances, namely, the WRU intervening in an attempt to save a financially struggling club. The Office of Fair Trading assessed the merger at the time and found no evidence that the merger would lead to a substantial lessening of competition and therefore no referral was made to the Competition Commission [21], a predecessor to the Competition and Markets Authority (CMA). It is also important to note that the WRU’s recent acquisition of Cardiff Rugby has not been referred to the CMA, although the CMA does have powers to intervene in transactions of its own motion.

In Europe, there are a number of recent merger cases with exactly this sort of theory of harm being investigated and the rules around merger reviews being stretched by authorities keen to look at transactions which they otherwise might not be able to review and a flexible approach taken by regulators who can use both merger control powers and abuse of dominance investigatory powers.

The Manchester City Football Club Limited v The Football Association Premier League Limited arbitration gives an indication as to how competition law might treat a competition organiser from a dominance perspective. In Manchester City, the Claimant successfully argued that the Premier League was in a dominant market position within the provision of its own competition and for the associated commercial exploitation markets related to the competition [22]. This means that sports federations and competition organisers’ rules and actions may well be reviewed from a competition law perspective – not purely as ‘sporting’ decisions, depending on the context.

So far, competition regulators have been reluctant to become embroiled in disputes relating to sports decision making except where there are very clear commercial markets directly involved. However, one thing that cannot be denied is the growing appetite for sports disputes in the UK and Europe on competition law grounds. In any event, the acquisition of Cardiff led to Scarlets and Ospreys refusing to enter into the PRA25. In response, WRU triggered the two-year notice period on the existing agreement and reaffirmed the future landscape will not see four evenly funded teams. The WRU has taken this approach due to the existing PRA being considered too much of a risk to refinance its debt. This decision has not been taken lightly and the WRU recognises the game is now entering a period of huge uncertainty.

Clearly, Welsh rugby is facing its biggest shake up since the move to the regional club format in 2003, and perhaps in its entire history. If the new structure goes ahead it is expected to take shape in 2028. In the meantime, all existing player contracts will be honoured, and the WRU will work with clubs and the United Rugby Championship to manage the transition. 

The WRU has given the four regions until the end of December 2025 to reach a consensus on which three clubs will continue under the new system. But following the Dragons walking away from negotiations, and the Scarlets and Ospreys pending arbitration against the WRU, the only common ground appears to be the resistance of the clubs against what they perceive to be unwarranted interference from the governing body. The WRU, on the other hand, sees its proposals as necessary to ensure that elite rugby in Wales not only survives, but thrives.

If no agreement can be reached, the WRU will launch a fair and transparent tender process to allocate the three licences to compete in the United Rugby Championship which will take approximately 6 months [23]. The WRU’s decisions will also be subject to further public scrutiny in January 2026, when the UK Government plans to question the WRU on the outcome of its consultation with a view to exploring “how the restructuring will affect the future of the game in Wales, while examining the wider importance of the sport to both our culture and economy [24].” 

[1] Unanimous board decision on the future of elite rugby in Wales (24 October 2025), https://www.wru.wales/2025/10/unanimous-board-decision-on-the-future-of-elite-rugby-in-wales/ 

[2] Chronicling 15 years of Welsh regional rugby - How it was born, the casualties and the never-ending debate (5 April 2018) https://www.walesonline.co.uk/sport/rugby/rugby-news/chronicling-15-years-welsh-regional-14495876 

[3] WRU two-team plan splits fans, sparks anger but 'change must happen' (21 August 2025) https://www.walesonline.co.uk/sport/rugby/rugby-news/wru-two-team-plan-splits-32313714

[4] WRU announce historic three-team plan at major press conference (24 October 2025), https://www.walesonline.co.uk/sport/rugby/rugby-news/live-updates-wru-announce-historic-32744399 

[5] The Welsh Rugby Union Limited Annual Report & Financial Statements 2025, https://www.wru.wales/2025/11/wru-publishes-annual-report/, pg 62

[6] ibid, pg 53-54

[7] ibid, pg 54

[8] The Future of Elite Rugby in Wales (WRU), https://ymlaencymru.com/wp-content/uploads/2025/08/190825-Updated-Confidential-Consultation-Pack3.pdf, pg 76

[9] ibid, pg 55

[10] Unanimous board decision on the future of elite rugby in Wales (24 October 2025), https://www.wru.wales/2025/10/unanimous-board-decision-on-the-future-of-elite-rugby-in-wales/

[11] Scarlets Board Statement on WRU Consultation (24 October 2025), https://www.scarlets.wales/article/scarlets-board-statement-on-wru-consultation/ 

[12] Ospreys Statement on WRU Plans (24 October 2025), https://www.ospreysrugby.com/news/ospreys-statement-wru-plans#:~:text=Ospreys%20are%20Wales%27%20most%20successful,which%20continues%20that%20proud%20tradition 

[13] Cardiff Rugby Statement (24 October 2025), https://www.cardiffrugby.wales/news/cardiff-rugby-statement-following-wru-announcement/ 

[14] Dragons Official Club Statement 24.10.25 (24 October 2025), https://dragonsrfc.wales/news/2025/october/official-club-statement-24-10-25.html 

[15] Dragons Official Club Statement 19.11.25 (19 November 2025), https://dragonsrfc.wales/news/2025/november/club-statement-19-11-25.html 

[16] New Owners Announced for Dragons RFC (8 September 2023), https://dragonsrfc.wales/news/2023/september/new-owners-announced-for-dragons-rfc.html 

[17] WRU's Cardiff takeover leaves Wales' three other clubs asking important questions (15 April 2025), https://www.walesonline.co.uk/sport/rugby/rugby-news/wrus-cardiff-takeover-leaves-wales-31426880 

[18] The Welsh Rugby Union Limited Annual Report & Financial Statements 2025, https://www.wru.wales/2025/11/wru-publishes-annual-report/, pg 52

[19] Ospreys and Scarlets in legal action against WRU amid Cardiff controversy (20 August 2025), https://www.walesonline.co.uk/sport/rugby/rugby-news/ospreys-scarlets-legal-action-against-32316405 

[20] Cutting two of Wales' four pro teams is WRU's 'radical' option (BBC, 20 August 2025), https://www.bbc.co.uk/sport/rugby-union/articles/c9d0nwepedeo 

[21] OFT closed case: Completed acquisition by Welsh Rugby Union of Ever 2033 Ltd (Competition and Markets Authority) (12 October 2004), https://www.gov.uk/cma-cases/welsh-rugby-union-ever-2033-ltd 

[22] Manchester City Football Club Ltd v The Football Association Premier League Ltd, Partial Final Award, (7 June 2024)

[23] WRU give regions six weeks to agree on future before it's taken out of their hands (19 November 2025), https://www.walesonline.co.uk/sport/rugby/rugby-news/wru-give-regions-six-weeks-32902602 

[24] UK Government (Committees), MPs to question WRU on consultation outcome and importance of rugby to Wales (24 October 2024), https://committees.parliament.uk/committee/162/welsh-affairs-committee/news/209877/mps-to-question-wru-on-consultation-outcome-and-importance-of-rugby-to-wales/