Welsh regions refuse to meet Welsh Rugby Union deadline
Wales' rugby regions have failed to meet the Welsh Rugby Union's 31 December deadline to reach a new legal agreement over the game's future.
Regional Rugby Wales (RRW) has instead given the WRU until the end of January 2014 to settle their differences.
The WRU responded strongly by hinting it could set up new teams for "sanctioned" games.
This raises the possibility of players being forced to choose between new WRU teams or existing regions.
However, it is understood a new agreement involving the unions and the current regions could still be established.
A row over the future of European competitions sparked the dispute between Wales' regions and their governing body.
Cardiff Blues, Scarlets, Newport Gwent Dragons and Ospreys continue to back England's top-flight clubs in wanting a revamped European competition, the Rugby Champions Cup (RCC).
A full-blown Anglo-Welsh league has also been mooted and is among the options Wales' regions are keen to explore.
An exodus of top Welsh players to higher-paying clubs in England and France has also formed the backdrop to the dispute over who controls the professional game in Wales and the money generated by it.
The WRU had given the regions until 17:30 GMT on Tuesday to re-affirm their commitment to the participation agreement that has underpinned their relationship since 2009 and which expires in June 2014.
The deal would tie the regions into playing in the Pro12 and Heineken Cup and making players available for international matches, while setting out the funding coming from the WRU for the next five years.
RRW, which represents the regions, has urged the WRU to ensure the four teams' future funding can match the finances available to their English, French, Scottish and Irish counterparts.
The regions stated: "A solution must be reached by the end of January 2014.
"Should this not be possible, the regions will have no choice but to pursue further competition options immediately."
RRW added: "It continues to be the absolute intent and strong desire of RRW and the regions to work with the WRU in progressing such a positive position for the next five years of professional rugby in Wales, or indeed to discuss any proposals WRU themselves may have that could provide an even stronger platform for sustainable and competitive professional rugby across Wales.
"Without change, professional rugby in Wales will fall further and further behind the rest of the European game."
The WRU has a legally binding obligation to enter four Welsh teams into the Pro12 and Heineken Cup next season and without the regions, it would have to develop new sides capable of competing in those tournaments.
Reacting to the regions' statement, the WRU said Welsh "teams" would play in the Heineken Cup and the Pro12 next season, and any cross-border competition would need to be approved by the relevant unions.
The WRU will now draw up a new participation agreement "focused on recognising and rewarding regions which identify, develop and retain players capable of challenging for international honours with Wales".