Wales's four regions have agreed to operate a salary cap next season, to help combat wage inflation at a time of falling attendances.
Having failed to extract more money from the Welsh Rugby Union last week, the regions on Tuesday joined forces to ensure that players and agents are not able to play one side off against another.
The £3.5m cap will cover the 38-strong squads for the Heineken Cup and the Amlin Challenge Cup. It will not include development players and academy costs and it will come into force in June next year, regulated by a scrutiny committee.
The Ospreys, the Cardiff Blues and the Scarlets have moved into new grounds since the introduction of regional rugby in 2003, but improved facilities have not been translated into higher gates. Little more than 7,000 watched the Ospreys play Saracens in the Heineken Cup on Friday, the team's average for the season.
The cap is less than the £4.2m imposed on Aviva Premiership clubs and a little more than half the €8m Top 14 clubs in France are allowed. If the scheme fails, central contracts would be a way out.
"This is a significant step forward for regional rugby in Wales and the future viability and balance of our four rugby businesses," said Stuart Gallacher, the chief executive of Regional Rugby Wales. "The regions have come together with a shared sense of responsibility to get their own houses in order and find solutions. This agreement is the start of that journey.
"They are eager to do all they can to achieve greater self-sufficiency this is a powerful signal of our determination to achieve our aims amidst some tough economic challenges in Wales now and in the future. All four are working very hard indeed to manage their businesses more effectively in a very difficult environment for everyone. As part of that, it is essential that every element of the circa £30m annual costs involved with operating four professional rugby businesses in European competition is examined in detail and managed effectively."
The WRU chief executive, Roger Lewis, said: "The chill winds have been blowing for some time throughout sport in the UK and they have hit the regions hard. This action has to be supported. The reasons for falling attendances are complex, but it is not all gloom and doom and I am sure there will be big attendances at the derbies over the festive period. The paradox of sport is that you cannot guarantee your team will win: it thrives on uncertainty, but that is something that is anathema to business."
The former Wales captain Kingsley Jones was named as coach of Russia on Tuesday in succession to Nikolay Nerush. "He'll be our head coach for the next four years until the 2015 World Cup," said the Russian Rugby Union chief executive, Vyacheslav Kopyev. Jones, 42, had worked under Nerush, who resigned after the World Cup in New Zealand where they lost all four group matches. The RRU also announced that the former England back Henry Paul, 37, would become coach of the sevens squad after working as backs coach for the Bears under Nerush. Russia will host the 2013 Rugby World Cup Sevens.
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