Exploratory talks over a possible merger between Welsh regions Cardiff and Ospreys have taken place as British rugby continues to struggle with financial difficulties.
The Gallagher Premiership of England have already seen three of their teams disappear this season. Worcester, Wasps and London Irish all disappeared after running into financial difficulties.
Welsh rugby is also having its share of economic problems after a tumultuous season on and off the pitch. Wales currently have four professional teams – Dragons, Cardiff, Ospreys and Scarlets – and they all signed a new six-year deal with the Welsh Rugby Union earlier this year on a status quo basis.
However, MailSport understands there are clauses in the deal for Wales to operate with three teams and not four in case one falls into trouble.
That’s why Cardiff and the Ospreys had discussions.
Cardiff have held talks over a possible merger with the Ospreys amid the financial difficulties of British rugby
The Ospreys (in black) also held merger talks with English side Ealing this year
A potential merger between the Ospreys and English Championship side Ealing was also discussed earlier this year.
After months of delays, three regions – Cardiff, Ospreys and Scarlets – have started to receive much-needed centralized funding from the WRU under the new deal.
The initial part of this funding is backdated to the 2021/22 season.
But longer term, the financial outlook remains bleak, which is why power brokers Cardiff and Ospreys have been discussing a possible future merger.
Welsh Rugby’s Professional Rugby Council – made up of WRU and regional representatives – said it had received no approach from any club to merge.
Cardiff, who finished the 2022/23 season as the best team in Wales, were left vulnerable at the end of March when former chairman and longtime backer Peter Thomas lost his battle with cancer. Thomas has made provisions in his will to continue supporting Cardiff through his estate for the next four years.
But the Cardiff hierarchy admitted after his death that the club was for sale.
Any potential deal between Cardiff and the owners of the Ospreys – Asia-based Y11 Sport & Media – would likely see Y11 take control of the capital’s stake which is owned by the Thomas family. Y11 also has a stake in the New Zealand Super Rugby Hurricanes franchise and is looking for new opportunities in the global rugby market.
Worcester Warriors, Wasps and London Irish have all disappeared with monetary problems this season
Y11 is backed by Navis Capital – a leading financial institution with $5 billion in assets under capital. They have also previously considered getting involved with the South African Stormers.
There is no guarantee that a merger between Cardiff and Ospreys will happen, but it is a path being explored by the respective parties.
The WRU has previously said it is committed to funding four regions.
But in 2019 the governing body came close to brokering a deal that would have seen the Ospreys merge with the Llanelli-based Scarlets as part of ‘Project Reset’.
That deal didn’t happen after a tidal wave of fury erupted at the proposal.
This time around, talks on the potential merger of two regions are still in their early stages, but come in a much worse financial climate than four years ago.
The four Welsh regions have been struggling financially since being tasked with repaying a £20million loan given to them by the WRU through the Welsh Government.
The loan was needed for the regions to survive the Covid-19 pandemic.
For the start of the 2023-24 season, each of the four teams will have a budget of just over £5m, with that budget dropping to £4.5m for the following campaign.
Simply put, the lack of money in Welsh rugby means player salaries and the size of regional teams are reduced and the chances of success on the pitch are slim.
All four Welsh regions have struggled since being tasked with repaying a £20million loan given to them by the Welsh Rugby Union through the Welsh Government.
As a result, there has already been an exodus of top Welsh talent overseas.
Many in Welsh rugby believe there simply isn’t enough money to fund four competitive regions. There is also uncertainty among the Dragons who still have a week to meet a deadline imposed by the PRB to turn the region currently held by the governing body into private property.
The reason the Dragons have yet to receive their first tranche of central funding is that they have yet to meet their private ownership stipulation. If they miss their deadline at the end of the month, they could cease to exist although there is confidence that a deal will be struck.
If a merger between Cardiff and Ospreys were to take place – and there will certainly be opposition – Welsh rugby would have to pay penalties to both the United Rugby Championship and European rugby. Indeed, the WRU receives around £9m from these two organizations on the basis that it provides four teams to its main domestic league and in Europe.
MailSport understands that the initial Cardiff-Ospreys merger proposals would involve the team playing at Cardiff Arms Park and for the team to be known as the Cardiff Ospreys.
The Ospreys do not own their own ground and currently play at Swansea.Com Stadium, home of Championship football team Swansea City. Their average gates are less than 5,000.
If a merger between Cardiff and Ospreys takes place, it would represent the most seismic change in Welsh regional rugby as the number of professional teams in the country fell from five to four when the Celtic Warriors disbanded after just one season in 2004. .
Welsh rugby has been plagued with issues and controversy on and off the pitch
It would also come at the end of a campaign that has seen Welsh rugby beset with problems and controversy on and off the pitch. Over the past 12 months, the WRU has been rocked by a sexism and misogyny scandal that saw its former chief executive resign while replacing Wayne Pivac as men’s national head coach with a returning Warren Gatland.
Wales players also threatened to strike ahead of the Six Nations game against England amid financial and contractual chaos that led to a delay in contract offers.
A possible merger of the Cardiff and Ospreys teams would effectively create the strongest national team in Wales.
But it would also put the future of many players in doubt.
There is also the question of who would coach the team. Cardiff boss Dai Young is currently suspended as he is investigated over allegations made against him by his colleagues.
Toby Booth is the current coach of the Ospreys.
Both teams’ best players are currently part of Wales’ pre-World Cup training camp and greater regional uncertainty will certainly be a distraction ahead of the tournament in France.
Ospreys players not involved with Wales have started to return to pre-season training, but Cardiff’s official preparations for the 2023-24 campaign have been delayed due to uncertainty over the future of Young.