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The Cardiff Blues franchise is to be handed back to the Welsh Rugby Union, who will take over responsibility for the region from July 1.

The Union will assume a babysitting role while the Blues board focus on the proposed redevelopment of the Arms Park and the construction of a new multi-purpose covered arena.

It remains to be seen whether the takeover will be a temporary or a permanent arrangement.

The dramatic news was revealed at the Cardiff Blues Ltd Shareholders AGM last night and chairman Peter Thomas has spoken exclusively to WalesOnline today to outline what lies ahead.

“It’s almost 50 years since we moved into where we are today and the Arms Park is in urgent need of redevelopment,” said Thomas.

“We want to put a multi-purpose sporting arena there which will be a facility for the future generations.

“To get to where we need to be is going to take a lot of money, a lot of investment, a lot of time and a lot of commitment.

“It will also mean the Arms Park being out of action for probably two to three seasons.

“As a consequence of that, we have been talking to the Welsh Rugby Union for their advice and support on how we manage that situation.

“We have said we want the WRU to babysit the Blues as a franchise for the foreseeable future.

“Now it may well be that will be a permanent arrangement and the governing body will take permanent control of the Blues as a region, as it is doing with the Dragons.

“But there is an invitation from the Union for private investors to come in and support the franchise at a later date.”

As for the timescale for the WRU takeover, Thomas said: “It’s agreed in principal that it will begin on July 1.

“We now have to work through the detail.

“All the staff are aware of the direction we are taking. They are all supportive and understanding of it, as is the Union.

“We have had to set ourselves a timescale as we have to focus on the development of the Arms Park.

“We are returning the franchise to the Union with no debt. We, the company, will continue to trade and will be honouring all our creditors.

“The Cardiff Blues board will remain as it is, running Cardiff Blues Ltd as a company.

“It has the Premiership team, the stadium and the commercial revenue. We will stay as we are. I will stay in my role as chairman and the board will stay in their role.

“But the running of the budget of the Blues in the future will be a matter for the WRU.”

Thomas added: “Private equity into the regional game in Wales over the last 20 years is probably approaching £80m and since the Blues won the Amlin Cup in Marseilles in 2010, the game in financial terms has changed massively.

“The average cost of a squad back in 2010 was about £3m. Now you can’t compete unless you’ve got a squad north of £6m.

“It’s not in the Welsh game at the moment. We can’t compete at the level we want to and focus our attention on the development. We can’t do both. The development is taking priority through necessity.

“The Union have approved the squad Danny Wilson wanted and the coaching side.

“This is very different to the Dragons, because all we are doing is handing the franchise back, for the reasons I have explained.”

One major issue for supporters will be the name of the pro team under WRU control, given the Newport name is to be removed with the Union takeover of the Dragons.

But Thomas insisted: “There is no question of it, the name Cardiff Blues will be there next season.

“It’s Cardiff Blues and Cardiff Blues it will remain.

“It’s a condition that we have set down with the Union and they have been very understanding and very sympathetic.

“They know that 90 per cent of what happens in the Cardiff Blues, be it membership, sponsorship, supporters is Cardiff city based.

“We continue to work with the Valleys to improve the situation and if you look at the squad, 60 per cent of them are from the Valleys.

“I think the Union are content with it being called Cardiff Blues for the foreseeable future.

“Now, nothing is forever in life. If there are matters in the future that suggest that should be changed, it will be done in consultation with supporters, members and the Union. There will be a common sense approach to it.”

The planned redevelopment of the Arms Park requires the ground’s owners - Cardiff Athletic Club - to agree to a long-term 150-year lease.

“For a number of years now, we have been talking to the landlords of Cardiff Arms Park, CAC, about the need to redevelop the ground,” said Thomas.

“Every year we spend six figures on just maintenance and tarting up and refurbishing and it’s just continuous.

“The Arms Park needs repairing. It’s no good throwing £100,000 a year at it on a lick and a promise.

“It’s the right opportunity to go forward for a redevelopment.”

He added: “We are still debating the way forward with CAC and they are being most helpful.

“What is of paramount importance is the heritage of Cardiff Rugby Football Club. The freehold will always be retained by CAC, ensuring Cardiff will always play rugby at the Arms Park.

“However, in order to get to that stage, we have to get a legal agreement with the Athletic Club which we are working on. We are not too far off completion. It’s got to go to the members and it will be ultimately their decision on which way forward we go.

“And finally it has to be approved by the trustees. We are on that journey and we have set ourselves a target for July 1 because that is the end of the Blues financial year.”

Thomas feels the redevelopment of the Arms Park would fit in perfectly with all the building work currently going on in that area of the capital.

“From the railway station to the castle is, in commercial terms, known as the Golden Mile and we are seeing so much work being done at the bus station and Wood Street,” he said.

“The Arms Park is the last commercial area that requires redevelopment. We want to put there, with the help of the City Council, a multi purpose sporting arena which can also be adopted for commercial use.

“We want the home of Cardiff RFC to be envied. It would be a brand new stadium, with its clubhouse, its trophy room, all its heritage, all its history, which could host multi sports.

“It can be converted into an exhibition hall, it can hold concerts, it can become a conference centre.

“To put that kind of investment in place, you can’t just do it on one item, rugby, 20 odd games a year.

“It has to be multi purpose to make it commercially viable.

“The boardwalk can be created into a massively vibrant place with restaurants and bars.

“Debate and discussion has been going on for quite some time with CAC. Ultimately when we get to the 150 year lease for development, we then have to have a commercial viable opportunity to invite potential investors in order to create the development. It could be north of £200m investment. “There is so much opportunity and a chance to put in place a fantastic development for future generations to enjoy.”

A WRU spokesperson said: “We are currently engaged in the early stages of dialogue with the Cardiff Blues about the future of professional rugby in the region. As with any complex discussion of this nature, we would not discuss detail in the public domain until such a time as an agreement was reached and, indeed, only if agreement is reached. No further detail is available at the moment, but all relevant parties will be kept up to date as any progress is made.”