Former Wales captain Gwyn Jones says Welsh rugby is facing its biggest crisis in the professional era.
The Welsh Rugby Union (WRU) and the regions are in dispute over funding, the exodus of Welsh players and an Anglo-Welsh league.
At a meeting on Wednesday, both sides failed to agree a deal to address those issues, but further talks are planned.
"I think this is probably the biggest crisis we have faced in professional rugby in Wales," said Jones.
Representatives from Welsh rugby's four regions - the Scarlets, the Ospreys, the Cardiff Blues and the Newport Gwent Dragons - met the WRU in an attempt to resolve differences and to discuss the future of the domestic game.
"The two sides, despite all the talking there has been for months, seem as far apart as they ever have been," said Jones. "Time is running out."
The regions have until the end of December to sign a new agreement or face losing funding of up to £16.5m a year.
But they are also considering whether to break away from the WRU and play in a new Anglo-Welsh league next season.
The Ospreys, Blues, Scarlets and Dragons say they want to play against English clubs rather than be forced by the WRU to compete in the Heineken Cup.
The regions could take legal action for the right to play in cross-border tournaments without WRU permission.
As they gathered at the Ospreys' home, Swansea's Liberty Stadium, there was increasing speculation the regions will not sign a participation agreement with the union before the 31 December deadline.
A WRU statement said it was "hopeful" the participation agreement between the parties would be signed before the 31 December deadline.
Jones says what the English clubs have done has posed real questions for Welsh rugby's powerbrokers.
"What England has done is very clever," said Jones.
"They have offered us the lovely, wonderful and appealing prospect of being involved in an Anglo-Welsh league.
"It sounds great...we have always thought it is the answer to all our problems.
"The panacea to Welsh rugby's problems at regional level would be a cross-border competition with all the stars of England, back to the old days and everything would be fine.
"It does sound on the face of it very appealing and it would help a lot, but it has huge implications for everybody else.
"We are therefore leaving the Irish and the Scottish out on a branch, without any professional rugby in those countries.
"That is rather unfair to our friends who have helped us in the last few years in the Rabo. Would the French be happy with an Anglo-Welsh competition and the monies that would generate?
"Are England really going to worry about us in five years time, when this deal comes to an end, if another more attractive competition comes a long?
"Where would that leave the regions who have turned their back on Wales?
"The union would have to have some teams of their own to play in competitions they sanction, and we could end up in the bizarre position of...a union led stream of players and a regional led stream of players, with both parties trying to pick them off at a young age to play in their competition.
"It sounds appealing, but I cannot see it going to work with the regions leaving Welsh rugby without the sanction of the WRU and playing in that competition."