On the eve of the SRU's new financial year, the Board recognised the sport can no longer afford to remain involved in all its current activities if its debt is to be reduced, and greater support and integration must be targeted at its National Academies.
Meeting at Murrayfield yesterday, the Board accepted recommendations proposed by the SRU Chief Executive, Gordon McKie, to prioritise funding into young player development by extending the National Academy structure and to reduce, or in some cases cut, specific rugby activities.
With the up to date budget presented to them for the first time, the Board were facing a potential, projected, loss of £2-3 million, which would give rise to additional debt on top of the existing £23 million, if no action was taken.
Consequently the Board agreed a series of measures to redirect the key priorities of the governing body.
Scottish Rugby will therefore seek to enter into joint venture partnerships with external investors over one, or perhaps more, of its three professional teams. The governing body remains open minded about which professional team or teams such joint ventures would involve and where the team or teams would be located.
As a matter of priority, agreement would be sought with partners, over areas such as the selection of key positional players and Scotland national squad player access.
Gordon McKie confirmed one of the aims of the proposed joint ventures was to retain as many professional players in Scotland as possible.
"That is one of our goals and we hope this can be achieved for the benefit of high performance rugby in Scotland. We'll be approaching this with an open mind and will be prepared to talk to all interested strategic investors.
"However, if suitable terms cannot be agreed and opportunities don't materialise, we will sadly have no alternative but to further reduce our investment in pro-team rugby between now and the start of next season."
The pressures on the budget have resulted in the governing body prioritising areas it believes are absolutely essential to develop players who might one day reach the Scotland national squad and play for their country.
The Scottish Rugby Board also considered all aspects of involvement in Sevens rugby and has decided to carefully assess what level of participation on the international sevens circuit Scotland can afford in the future.
It was decided that future participation in the abbreviated game could be selected from the extended National Academy structure but a separate 7s squad would no longer need to be maintained.
However the importance of Sevens was fully recognised by the Board, including the positive part rugby can play in Glasgow's important bid to host the Commonwealth Games in 2014.
Moreover, consideration was given to the recent invitation to the SRU by the International Rugby Board to discuss its proposal to stage one of the final legs in their world sevens circuit at Melrose, the Borders town of its birth. The Board called for an examination of the commercial merits of the idea and the Chief Executive plans to discuss its viability with the IRB as early as next week.
As well as 7s, Scottish Rugby is currently involved in all representative age groups from U17s, U18s, U18a, U19s and U21s, through to Scotland A, just below the senior squad.
At a time when international rugby in the northern hemisphere is considering changing Under 19s and Under 21s competitions and possibly introducing Under 20s instead, the SRU Board has now closely examined all its representative responsibilities and agreed it could no longer continue its involvement with them all.
Consequently, it is proposed that Scotland's Under18s team will continue but an Under 18a team will no longer exist.
There will be no further involvement at Under 19 level, with the possible exception of the 2007 IRB U19 World Cup in Belfast.
Due to international rugby's consideration of a possible U20s competition, the SRU Executive Board has decided there will be no future Scottish involvement at U21s level, except for the U21s World Championship in France in June. Possible involvement in the U20s age group will be examined.
The Board recognised the importance of continued involvement in the women's game. However financial commitment to the international game is likely to be reduced and a Women’s sponsor would be warmly welcomed.
Investment in the community game, where talent is identified and nurtured, will be increased overall. The Board recognised the importance of increasing the player base in Scotland’s clubs.
The SRU Chief Executive, Gordon McKie, has been in post for eight months and is charged with turning around Scottish Rugby's £23 million debt. He commented, "Scottish Rugby has lost over £20 million in nine of the last eleven years, so it's no surprise that our budget priorities now dictate this long overdue action by the Board.
"The changes to our representative teams are much needed. Historically there has been a serious lack of proper preparation and intensity of competition, which resulted in a consistent inability to compete meaningfully at underage rugby.
"Going forward we will introduce properly structured player development programmes, which will allow more of these young players the opportunity to make the grade within high performance rugby.
"We've been over ambitious in all that we have taken on at the elite end of the sport. This is a business after all and we can only do what we can afford to do."
There will also need to be savings in every departmental budget at Murrayfield and the day to day running of the SRU will be tightened up across the board. McKie added, "Since joining the SRU last August I have found some of its practices unnecessarily cumbersome. For example there were as many as nine financial ledgers in existence. That cannot be allowed to continue and as from next week there will be one ledger and greater accountability across all areas.
"The Board has also passed a recommendation to allow an agreed number of corporate hospitality packages to be sold to sponsors and Scotland supporters, to attend our formal dinners after Murrayfield international matches. This will bring in much needed new money and offer some lucky people a very special experience in the company of both of the international teams on the night."
The Chief Executive concluded, "We have ambitions to grow the game at both ends of the sport, to offer more young people from all sorts of communities the opportunity to take up rugby from an early age, find it great fun and stay involved through clubs and schools.
"Success for the Scotland national team is also an absolute priority. But to succeed in our goals, we need to attract greater funding through many sources. In the meantime, our priority today is to recognise where we are in these objectives and to cut our cloth to fit our resources. The Board's decisions today are an essential start."