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As the WRU and the four Welsh regions prepare for showdown talks on Wednesday, rugby correspondent Simon Thomas looks at how we have reached crisis point and considers the likelihood of our top teams joining the English Premiership

Q: How do we find ourselves on the brink of civil war in Welsh rugby?

A: Essentially, it all comes down to money.

At the centre of the whole dispute lies the Participation Agreement between the WRU and the four regions - the Scarlets, Ospreys, Blues and Dragons.

That PA covers issues such as the competitions the teams play in, payment for international player release, overseas player quotas and the fourth autumn Test match.

It runs out at the end of this season and is currently up for renewal.

But the regions are unhappy with the terms they are being asked to sign up to.

They feel funding levels from the WRU have not kept pace with the spiralling costs of retaining star players.

In particular, they have issues over the compensation payments for international player release, the amount they receive from the out-of-window fourth autumn Test and the split of revenue from the new 20-team Heineken Cup planned for next season.

At the moment, the four regions receive £6.6m between them from WRU central funds.

In basic terms, they feel it is simply not enough.

They argue it makes it impossible for them to hold on to their star players in the face of big money offers from French and English clubs.

That has been evident from the continuing exodus which has seen the likes of Jonathan Davies, George North, Richard Hibbard, Jamie Roberts, Dan Lydiate, Ian Evans, Luke Charteris and James Hook departing for foreign fields.

From a wider perspective, the regions maintain the current funding level just doesn’t offer them a sustainable future.

The Union’s stance is that the index-linked compensation for international player release continues to grow under the terms signed up to by all parties in 2009.

They would also argue that £6.6m is hardly a drop in the ocean.

But the bottom line is the two sides are a long way apart when it comes to settling on the financial figures, so the PA remains unsigned.

What have been the consequences of this impasse?

It has led the regions to look for alternative sources of additional income.

This was essentially why they threw their support behind the proposed breakaway Anglo-French Rugby Champions Cup.

As things stand, the four regions receive about £1.1m each from competing in the ERC-run European Cup competitions.

On offer if they joined up with the RCC was £1.7m apiece.

As a result, they gave their full backing to the competition in the hope the WRU would secure them a spot in it.

But the Six Nations Unions, apart from the RFU, opted to stick with the existing Heineken Cup and pledged to enter teams into the event.

Under pressure from their Federation, the French Top 14 clubs agreed to return to the ERC-fold for a season - but only if the English clubs were involved as well.

Last week, Premiership Rugby announced they were sticking to their guns and would not be competing in the Heineken Cup.

They also declared they would be “pursuing other options” which has inevitably led to increased speculation about some form of Anglo-Welsh link-up.

What form could that Anglo-Welsh link-up take?

Having confirmed their exit from ERC, the English clubs now have nine blank weekends in their fixture list.

One option could be to expand the existing LV Cup, but the more tantalising possibility is of them inviting the four Welsh regions to join the Aviva Premiership, making it a 16-team event.

It’s an idea that seems to be garnering increasing support over the bridge, with Saracens chairman Nigel Wray a consistently vocal advocate and English champions Leicester having now given their unanimous backing.

It’s also a concept which Welsh regional bosses believe offers new hope for the future, at a time when their working relationship with the WRU has strained to breaking point.

So what are the chances of an Anglo-Welsh Aviva getting off the ground?

They seem to be increasing by the day.

First and foremost, of course, the offer has to be made by Premiership Rugby.

There are clearly issues to overcome there, such as how ambitious Championship sides like Bristol, Leeds and London Welsh would feel about Welsh teams effectively leapfrogging them in the league ladder.

There are also logistical issues looking ahead to the season after next when the Premiership won’t be able to begin until November 2015 as England are hosting the World Cup.

How you would fit 30 league fixtures into that constricted schedule remains to be seen.

But where there’s a will there’s a way and there does seem to be an increasing will across the bridge.

You then come to the hurdles that would have to be overcome in Wales.

The WRU are committed to the Pro12 for at least three more years, so would hardly want to see their professional sides competing in another league. They would want to see them stay in the Pro12 and also take part in the Heineken Cup.

Without Union approval, a new Anglo-Welsh competition would run into all sorts of trouble in terms of IRB sanction.

Which is why the spectre of legal action has arisen.

The suggestion is the regions could take the WRU to court if they attempt to prevent them joining the Aviva.

They believe a precedent was set 20 years ago when the FAW told Newport County they would no longer be able to play in the English league system and had to compete in the League of Wales.

The club took the FAW to the high court and won, enabling them to stay in the English system and go on a journey that has seen them promoted back to the Football League.

The theory is forcing the regions to compete in officially sanctioned competitions, while denying them the right to explore other opportunities, would be a restraint of trade.

Context is added to this by the regions maintaining privately that the new Heineken Cup deal would see them receive a more modest increase in funding than the other teams in the tournament at a time when they receive less centrally than any of them.

Read: WRU and Cardiff Blues urged to work together to keep Sam Warburton in Wales

What would be the consequences of the Welsh regions joining the Aviva?

Well, while the WRU may not legally be able to prevent them from doing so, they would almost certainly withdraw funding.

In addition to the £6.6m out of central funds, the regions also receive around £9.3m from competition and TV revenue from the tournaments they take part in.

That money is passed on to them by the WRU.

So, in total, the regions receive about £16m between them in funding at present.

That current revenue stream would disappear if they join the Aviva.

The question for them is how much would they be able to generate by jumping ship, both in terms of BT TV cash, sponsorship, commercial deals and hopefully increased crowds.

Those, presumably are the very sums that are being worked out right now, as they look to see how close they can get to the current £4m apiece.

Their hope would be that regular games against the likes of Leicester, Bath, Northampton and Gloucester would generate huge interest and resultant revenue, with old rugby rivalries being renewed.

One other point to remember is it wouldn’t necessarily be the regions that head for England but perhaps their club alter egos.

Cardiff Blues and Llanelli Scarlets are essentially franchises given out by the WRU through the Participation Agreement, while Newport Gwent Dragons are actually 50 per cent owned by the Union.

If the PA isn’t renewed, then the WRU have indicated the regions would effectively cease to exist.

But Cardiff RFC, Llanelli RFC or Newport RFC would still exist and that could be the form the teams take in the Aviva.

What would happen with the Ospreys brand remains to be seen, with that situation being rather more complicated.

What would the Union do if the regions/clubs did breakaway to join the English Premiership?

Well, the WRU still has a commitment to enter teams into the Pro12 and the Heineken Cup.

So the likelihood is they would look to set up new regions and transfer the existing funding to them.

That could see sides established in west, east and north Wales, with maybe a Valleys team set up as well.

It would enable the Union to start again from scratch and have full control over these new regions.

But where the sides would play and who would play for them would obviously be a major issue, certainly in the immediate term.

It would also remain to be seen how Sky would feel about these new star-shorn sides being entered into a Heineken Cup already stripped of the English clubs and potentially the Top 14 French clubs.

And the same goes for the PRO12 organisers and the Irish, Scottish and Italian sides.

What is likely to happen next in this ongoing saga?

Tomorrow, the WRU and the regions meet for arguably the most important talks in the professional era.

The regions will be looking for some sign of movement from the WRU in terms of the financial offer on the table via the Participation Agreement.

If nothing is forthcoming, then you would expect them to press ahead with plans to join the Aviva.

Then we really would be at year zero for Welsh rugby.