The Welsh Rugby Union has published the evidence underpinning its decision to axe one of the Ospreys or Scarlets, with the governing body adamant two of the three teams going forward should be based in Cardiff and east Wales.
After months of criticism over a perceived lack of transparency, the WRU has released the Keystone Report which examines where the three professional licences should be based. It assesses the four teams against six key factors - population and accessibility, rugby infrastructure, financial sustainability, player pathways and sporting performance, along with fan support and heritage.
Report favours Cardiff and Dragons
The report gives strong weight to the population sizes and accessibility of Cardiff and the Dragons, while those two sides also come out top on financial sustainability metrics used. Less importance is placed on sporting performance and heritage, with the Dragons the worst region on the field.
The WRU has also published a new microsite that hosts progress reports, detailed documents and supporting evidence behind its future operating model for the men's professional game in Wales.
Under the WRU’s proposals, one licence will be allocated to Cardiff, one to east Wales and one to west Wales. Cardiff and the Dragons will have first refusal on two of the licences, leaving the Ospreys and Scarlets to fight it out for the remaining place unless they can agree to merge voluntarily.
Keystone Report commissioned in June
The Keystone report was commissioned in June, with the firm tasked with evaluating the available data against the WRU executive's decision. Keystone describes itself as an economic, strategy and technology consultancy that helps clients navigate the challenges of the digital age, with offices in London, New York, San Francisco and Boston.
The report acknowledges parts of its data was based on results of a regional rugby survey conducted as far back as 2018. Keystone were also asked to consider the boundaries of the three new areas, recognising some will need to be redrawn, but no definitive three-team maps were produced.
The WRU's executive believes there should be a club in the capital because it has the largest addressable market and strong accessibility. The capital also has the largest local population base in Wales, the report shows. Cardiff also ranks second regarding the number of people within a 30-minute drive and it has the shortest average rail time from representative stations across Wales.
They also state that "any actual, potential or perceived benefits to the WRU in its capacity as the current owner of Cardiff Rugby should not form any part of its decision."
East Wales case and financial factors
The WRU insists there should be a professional club in east Wales because of its "large local addressable market and strong accessibility." It states a club based at Rodney Parade would have the greatest number of people within a 30-minute drive and would be second only to Cardiff with respect to accessibility by train from across Wales.
In addition, according to the most recent fan survey available to Keystone, respondents in the east showed the highest local support for their regional team, notwithstanding the poor competition performance results around that time. Cardiff and the Scarlets have the highest attendances, though.
The WRU has also put huge weight on the Dragons owning its own stadium, along with the club performing strongly from a commercial perspective. Despite the Dragons being the worst-performing Welsh side since the inception of regional rugby in 2003, the WRU board has decided that should be afforded "limited weight" because it is expected to improve significantly under the proposed new model.
Greater weight across the board has been given to the factors which are least likely to change, such as population, accessibility and rugby infrastructure, compared to factors which are more likely to change under the new system, such as sporting performance and player pathways.
In terms of financial sustainability, Cardiff and the Dragons outperform the Scarlets and Ospreys in terms of revenue outside matchday and competition income, with the east Wales teams generating more than double the revenue of the Ospreys, according to the report.
The WRU board, apart from the Professional Rugby Board chair Marianne Okland who recused herself, all voted unanimously for the plan. The decisions have been made by the WRU board over an extended period, starting last summer and concluding this July.
Six key factors assessed
Keystone assessed the four existing clubs across six objective factors. These were population and accessibility, rugby infrastructure, financial sustainability, player pathways and sporting performance, along with fan support and heritage.
When it comes to population and accessibility, the data is based on whether the local population base can reasonably access and engage with each club, including by private and public transport. Keystone assess the population within defined drive-time catchments, including 30-minute and 60-minute drive times.
Cardiff has the largest population catchment with 937k - more than double the Scarlets, which has the smallest population catchment at 387k. When it comes to the 30-minute drive-time catchments, the Dragons come out on top at 671k, with 666k to Cardiff Arms Park, 401k to St Helen's and 388k to Parc y Scarlets.
It also states Cardiff have the largest estimated supporter base, based on data in 2018. According to data from 2024/25, Cardiff have the largest average attendance at 8.8k, followed by the Scarlets at 6.6k, with the Dragons at 5.7k and the Ospreys at 4.9k.
The report says existing infrastructure is a relevant consideration because clubs with higher-quality stadia, training facilities and other assets may be better placed to operate successfully under a three-club model, while a modern, high-quality stadium can support matchday revenues. The Scarlets have the best infrastructure but the Dragons are the only club that owns their own stadium.
Player pathways were also investigated but Keystone does not believe community clubs would cease to operate if the professional side in that region disappeared. According to Keystone's first Wales cap analysis, the Scarlets have produced the most players for Wales, followed closely by Cardiff, then the Ospreys and the Dragons.
When it comes to sporting performance, some weight is given to past achievements but Keystone states "past performance is not determinative of future performance, and the move to a three-licence system may change the allocation of players and the future performance of existing clubs."
Additionally, grassroots participation was investigated, using WRU reports of school teams, playing teams and coaches. It was concluded Cardiff ranked first in all metrics, Dragons in the middle and Ospreys and Scarlets shared bottom place in the three sections.
Financial sustainability and next steps
The report also looks at the financial sustainability of each organisation. Cardiff and Dragons currently lead on total and commercial revenues at £11.9m and £11.8m, respectively. The Scarlets are third on £10.2m with the Ospreys last on £9.2m.
The report gives particular relevance to revenue generated by each club outside of competition income and WRU funding, such as sponsorship and matchday income, as it "indicates each club's ability to generate revenue independently". On that measure, Dragons and Cardiff are strongest, with sponsorship, matchday and other revenues of £4.9m and £4.4m respectively. Scarlets generated £3.2m, while Ospreys generated only £1.7m - less than half Cardiff and Dragons' levels.
As things stand, the process to reduce to three teams will begin with a ‘State of the Game’ summit in early December. By March 2027, the future operating model for the game in Wales will have been designed with the input and involvement of those affected by the new model.
The process will establish the future licence terms beyond 2028 and which of the four existing clubs wish to participate in the new model. If more than three clubs confirm that they wish to participate, the WRU Board will then need to determine the process through which either Scarlets or Ospreys will be chosen for the west licence.
The current intention is for the licence implementation process to be complete by June 2027. This will provide the clubs with 12 months in which to prepare for the new framework taking effect from 1 July 2028.
