The four Welsh RaboDirect PRO12 sides have for the first time introduced a salary cap in a bid to support player development and long-term financial sustainability.
Supported by the WRU, the four professional regions – the Ospreys, Blues, Scarlets and Dragons – will have their European squad capped at a total wage bill of £3.5million starting in the 2012/13 season.
This ceiling does not include development players or academy costs and will be regulated and reviewed annually by a 'scrutiny committee' comprising regional board members, the chairman of Regional Rugby Wales (RRW) and an independent chairman.
The decision is designed to help the four regions balance their books while also encouraging greater investment in local talent.
The move comes after concerns over the decision of several big name Welsh players moving to France, with Lee Byrne, Mike Phillips and James Hook all seeing their places in February’s Six Nations come under threat.
“This is a significant step forward for regional rugby in Wales and the future viability and balance of our four rugby businesses that are so vital to the development and promotion of the game in Wales,” said Stuart Gallacher, 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 and our governing body the WRU has been wholly supportive of and endorsed the initiative we have taken.
“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 regions are working very hard indeed to manage their businesses more effectively in a very difficult environment for everyone.
“Nobody will make light of the challenges ahead but initiatives like this new salary cap must give our rugby supporters renewed confidence in our ability to move with the times, be decisive and make a stand with cohesion and a shared vision and united spirit.
“The regions have come up with a plan to take things forward and create a level-playing field with salary bands that they all agree are achievable, will maintain the quality and excitement of the regional game in Wales and will encourage greater investment in our local talent.”