Yahoo Finance WRU explains finances behind its ambitious plans
The Welsh Rugby Union announced a five-year plan for the future of Welsh rugby this week.
Chief executive Abi Tierney and chair Richard Collier-Keywood discussed a number of goals to 2029, including having national teams consistently ranked in the world's top five.
They also addressed targets such as having club teams challenging in the play-offs of the United Rugby Championship (URC) and the Celtic Challenge.
Having outlined their future plans, the WRU has since sought to clarify the financial details behind their aims.
The £4.5m salary cap, a reduction from £5.2m in the 2023-24 campaign, will apply to Cardiff, Dragons, Ospreys and Scarlets next season. Two marquee players are permitted outside of the cap.
The governing body is keen to ensure the £4.5m figure is not to be confused with the £4.275m sum each region receives per year from the WRU "in return for their services, put crudely the provision of players for the international game".
One of the goals of the WRU's 'One Wales' strategy is to increase this level of funding.
Welsh rugby's struggles have been well documented, as have the WRU's own issues.
But the body's stark financial situation has been laid bare.
It was stated there is a £35m funding gap for the regions over the next five years, putting the future of all four regions in doubt. However, that particular sum has now been revised as £29m.
Broken down, the WRU estimates a £1.45m gap in funding per year, per regional team over five years, taking the total to £29m, not £35m.
Meanwhile, the WRU is currently carrying £20m worth of debt, which it states "is not an unusual number for a £100m business".
The WRU added: "It is not de-stabilising. The business is in a stable condition.
"However, there is value to be gained from refinancing this debt and this will help us to bridge the funding gap in the professional game we describe."
The WRU confirmed the debt is held by the regional clubs, adding that it "has an impact on their ability to raise additional debt finance".
As with many businesses, the Covid pandemic added to the WRU's financial issues.
The Welsh Government awarded Welsh rugby £13m in grants to help it through the pandemic.
The WRU has already identified £3m of savings in the professional game in Wales.
A WRU statement read: "This money is saved by the introduction of a shared services collaboration with the four regional clubs in an agreement which forms part of the 'One Wales' strategy.
"This is an annual cost efficiency and has been considered in calculating the funding gap described.
"A new head of commercial growth officer appointment will oversee this shared services work as well as seek to grow the commercial value of the professional game in Wales – to further bridge the funding gap."
