The Welsh Rugby Union has announced that it is to cut from four regions down to three by 2028, with the Ospreys and Scarlets in the most danger of facing the chop.
At a special press conference held today, the union confirmed that it will, "grant three licences for men's clubs; one for the capital, one for West Wales and one for East Wales".
It also said that there will be equal funding for the three team squads starting at £6.4 million and rising to £7.8 million per annum.
WRU chair Richard Collier-Keywood told reporters that, "our decision is that the future structure of elite men's rugby will be based on three professional men’s clubs, replacing the current four-team model, alongside two women’s elite teams."
However, despite this move, they aim to honour all existing contracts.
"Any change is difficult, and we have current contractual obligations to the URC and our professional clubs that we will honour in the absence of new agreements.
"We want to involve the URC and the owners and managers of the current clubs in how we get to our chosen destination. This may take some time, but we will work hard to get this done as quickly as possible.
"We have already guaranteed that all existing player contracts will be honoured," Collier-Keywood continued.
The WRU carried out a comprehensive nationwide survey this year, with more than 7,000 responses. The aim is to overhaul and improve the club model within the fabled rugby territory.
The announcement also brings with it a promise of further investment, of approximately £40 million across five years, to be spread across the game.
The addition of two "elite" women's teams will add fuel to the speculation of a women's URC being launched in the coming years.
Amanda Bennett, chair of the women's rugby committee, said it was a "transformative moment for women’s rugby in Wales", with the aim now of attracting and retaining top talent.
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