THE FOUR Welsh regions have announced that they will operate under a salary cap from the start of next season as part of a landmark agreement designed to deliver long-term sustainability in the professional game in the principality.

The salary cap of €4 million will cover the players registered for European competition by the Ospreys, Cardiff Blues, Scarlets and Newport-Gwent Dragons, but does not include development players or academy costs.

It is hoped that the cap will lead to a greater emphasis on developing the next generation of Wales-qualified players.

The Welsh regions have seen an exodus of star talent in recent seasons, with several players choosing to join wealthy French clubs. James Hook, Mike Phillips and Lee Byrne sealed moves to Perpignan, Bayonne and Clermont Auvergne respectively, while lock Luke Charteris is also thought to be close to a move to Perpignan after announcing that he will leave the Dragons at the end of the season.

Ospreys prop Adam Jones and Blues counterpart Gethin Jenkins have also been linked with overseas moves, leading regional coaches to call for the Welsh Rugby Union to provide them with extra funding in an effort to help them stave off the threat of cash-rich clubs in England and France.

But rather than top-up the money handed to the regions, the new agreement effectively removes the potential for dramatic increases in salary costs as a means of holding on to big-name players.

Stuart Gallacher, chairman of Regional Rugby Wales, the umbrella body which represents the regions, said: “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.”

A salary cap is already in place in the English Aviva Premiership, the current limit of €4.7 million is set to rise to €5 million from next season, but that also includes development and academy costs.

The cap in France stands at €8.5 million. The new agreement does not affect the Participation Agreement between the WRU and Regional Rugby Wales, put in place in 2009, which sees €7 million split between the four sides, with the governing body also funding the regional academies.

The WRU have praised the regions for their initiative, and are hopeful it will lead to a greater focus on nurturing talented youngsters within the Welsh system.