Welsh Rugby Union chief executive Roger Lewis says leading French clubs' wage bills are "totally unsustainable".
Lewis was speaking amid fears of a growing player exodus to France and in the wake of Wales' four rugby regions announcing a salary cap.
"One simply cannot compete with the vast sums of money that are being pumped into the game in France at present," said Lewis.
"And sums, I say, which are totally unsustainable."
Lewis has backed the regions' stance and says the money on offer to targeted Welsh players could undermine the sport's viability.
He added: "Rugby cannot, simply cannot, afford to pay the salaries that are being paid in France at the moment for the game to survive and prosper.
"What we've got to offer our players in Wales is a fair and reasonable wage and I think we do that.
"We certainly do it at the WRU and I think the regions are trying to do that as well and we've got to invest in the bottom [end] of the game."
From next season onwards, each of Wales' four regions will spend a maximum of £3.5m on 38 registered Heineken Cup and Amlin Challenge Cup squad members.
With French Top 14 clubs thought to be running significantly higher wage bills, Wales props Adam Jones and Gethin Jenkins are among the latest names linked with moves away from Wales.
Luke Charteris could also play in France next season while James Hook, Lee Byrne and Mike Phillips are already there.
Clubs in England's Premiership operate their squads on a total salary budget of £4m per season.
Senior figures at the regions - Cardiff Blues, Newport Gwent Dragons, the Ospreys and Scarlets - have made calls for the WRU to provide extra cash in a bid to persuade star players not to move to any French Top 14 and English clubs or further afield.
Dragons lock Charteris is the latest player to announce he is leaving Wales and could line up alongside Hook at Perpignan next season.
Scrum-half Phillips left the Ospreys for Bayonne at the end of last season, while Byrne went from the Swansea-based region to Clermont Auvergne.
The stock of other leading Welsh players rose at the World Cup as they reached the semi-finals and then finished fourth following defeat by Australia.
Since then Ospreys prop Jones and fellow British and Irish Lion Jenkins, of the Blues, have been linked with moves to France.
Dragons wing Aled Brew is also reportedly a Perpignan target, while the Scarlets fear young stars such as fly-half Rhys Priestland, wing George North and centres Jonathan Davies and Scott Williams could also fall prey to foreign clubs.
Wales coach Warren Gatland has warned players their Test careers could suffer if they move to clubs outside Wales.
Two weeks before the 2012 Six Nations Wales will travel to Poland for a training camp and Gatland has said players unavailable for it may not be considered for the tournament.