EXCLUSIVE: Talks held over potential merger with Cardiff and Ospreys

EXCLUSIVE: Talks have been held over a potential merger with Welsh sides Cardiff and Ospreys… as British rugby continues to battle financial hardship after the demise of three Premiership sides this season

• Wales has four professional sides – Dragons, Cardiff, Ospreys and Scarlets 
• Mail Sport understands Wales can operate with three teams if one hits trouble 
• Cardiff and Ospreys have held preliminary talks over a potential future merger

Exploratory talks over a potential merger between Welsh regions Cardiff and Ospreys have taken place as British rugby continues to battle financial hardship.

England’s Gallagher Premiership has already seen three of its sides fall out of existence this season. Worcester, Wasps and London Irish all disappeared after encountering monetary woes.

Welsh rugby has its fair share of economic problems too after a tumultuous season both on and off the pitch. Wales currently has four professional sides – Dragons, Cardiff, Ospreys and Scarlets – and they all signed up to a new six-year agreement with the Welsh Rugby Union earlier this year based on that remaining the status quo.

However, MailSport understands there are clauses within the agreement for Wales to operate with three teams and not four in case one falls into trouble.

That is why both Cardiff and the Ospreys have been in discussions.

Cardiff have held talks over a potential merger with Ospreys amid financial difficulties in British rugby

Ospreys (in black) also this year previously held talks over a merger with English side Ealing

A potential merger between the Ospreys and English Championship side Ealing was also debated earlier this year.

After months of delays, three regions – Cardiff, Ospreys and Scarlets – have started to receive much-needed centralised funding from the WRU as part of the new agreement.

The initial part of that funding is backdated from the 2021/22 season.

But longer term, the financial outlook remains bleak which is why powerbrokers at Cardiff and Ospreys have discussed a possible merger in the future.

Welsh rugby’s Professional Rugby Board – made up of WRU and regional representatives – has said it has received no approach from any club to merge.

Cardiff, who finished the 2022/23 season as the top team in Wales, were left vulnerable at the end of March when former chairman and long-term financial backer Peter Thomas lost his battle with cancer. Thomas made arrangements in his will to continue to subsidise Cardiff via his estate for the next four years.

But Cardiff’s hierarchy admitted after his death the club was up for sale.

Any potential deal between Cardiff and the owners of the Ospreys – the Asia-based Y11 Sport & Media – would likely see Y11 take control of the stake of the capital side which belongs to the Thomas family. Y11 also have a stake in New Zealand Super Rugby franchise Hurricanes and have been searching for more opportunities in the global rugby market.

Worcester Warriors, Wasps and London Irish all disappeared with monetary issues this season

Y11 are backed by Navis Capital – a leading financial institution with $5 billion in assets under capital. They have also previously looked at becoming involved in South African side Stormers.

There is no guarantee a Cardiff and Ospreys merger will happen but it is an avenue being explored by the respective sides.

The WRU has previously stated it is committed to funding four regions.

But in 2019, the governing body came close to brokering a deal which 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 over two regions potentially merging are at an early stage but come amid a landscape of a far worse financial climate than four years ago.

The four Welsh regions have been struggling financially ever since they were tasked with repaying a £20million loan given to them from the WRU via the Welsh Government.

The loan was required for the regions to survive the Covid-19 pandemic.

For the start of the 2023-24 season, each of the four sides will have a budget of just over £5m with that dropping to £4.5m for the following campaign.

Simply put, the lack of money in Welsh rugby means player salaries and regional squad sizes are being cut and the chances of on-field success are slim.

The four Welsh regions have struggled since tasked with repaying a £20m loan given to them from the Welsh Rugby Union via the Welsh Government 

There has already been an exodus of top Welsh talent abroad as a result.

Many in Welsh rugby believe there is simply not enough money to fund four competitive regions. There is also uncertainty at the Dragons who have a week left to meet a PRB-imposed deadline to take the region currently owned by the governing body into private ownership.

The reason the Dragons are yet to receive their first tranche of central funding is because they have not yet met their private ownership stipulation. If they do not meet their deadline at the end of the month, they could cease to exist although there is confidence a deal will be concluded.

Should a merger between Cardiff and Ospreys take place – and there is sure to be opposition to it – Welsh rugby would have to pay penalties to both the United Rugby Championship and European rugby. That’s because the WRU receives an estimated £9m from those two organisations on the basis it provides four teams to its main domestic league and in Europe.

MailSport understands that initial proposals for a Cardiff-Ospreys merger would involve the team playing at Cardiff Arms Park and for the team to be known as Cardiff Ospreys.

The Ospreys don’t own their own ground and currently play at the Swansea.Com Stadium, home to Championship football side Swansea City. Their average gates are less than 5,000.

Should a Cardiff and Ospreys merger take place, it would represent the most seismic change in Welsh regional rugby since the number of the country’s professional sides went from five to four when the Celtic Warriors were disbanded after just one season in 2004.

Welsh rugby has been dogged by problems and controversy both on and off the field

It would also come at the end of a campaign which has seen Welsh rugby dogged by problems and controversy both on and off the field. In the last 12 months, the WRU has been rocked by a sexism and misogyny scandal which saw its former chief executive resign while it also replaced Wayne Pivac as national men’s head coach with a returning Warren Gatland.

Wales’ players also threatened to strike ahead of the Six Nations match with England amid financial and contractual chaos which led to a delay in contractual offers.

A possible amalgamation of the Cardiff and Ospreys squads would effectively create the most powerful domestic side in Wales.

But it would also put the futures of many players into doubt.

There is also the question of who would coach the team. Cardiff’s boss Dai Young is currently suspended while being investigated over claims made against him by his fellow employees.

Toby Booth is the current Ospreys coach.

The best players from both teams are currently part of Wales’ pre-World Cup training camp and more regional uncertainty is sure to be a distraction ahead of the tournament in France.

Players from the Ospreys not involved with Wales have begun to return to pre-season training but Cardiff’s official preparations for the 2023-24 campaign have been delayed because of uncertainty over Young’s future.

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