Scottish Rugby expects to lose £10.6m this year and says 35 roles are at risk of redundancy.
The governing body has announced a “financial reset programme” after forecasting a loss of over £10m for the second year in a row.
The plan aims to take the union out of the red by 2025/26 and into profit the year after, but commits to maintaining current levels of funding for Glasgow Warriors and Edinburgh for next season.
That means both clubs are free to sign players.
All other recruitment at Murrayfield has been frozen, apart from the search for a new chief executive to replace Mark Dodson, and performance director.
Planned repairs and improvements to Murrayfield will also be made in order to bolster hospitality and bring in more cash.
Chairman John McGuigan says the board has taken the “difficult” but “responsible” approach to “secure the longer-term future of our game.”
He added the redundancy process would be handled with “care and compassion.”
“The financial sustainability of Scottish Rugby is our absolute priority as it enables all the other things we aspire to do to work,” McGuigan said.
The organisation says its plans and budget was reviewed by independent financial experts.
Scottish Rugby currently has £16m in the bank with another £7.4m due to arrive in July as part of investment company CVC’s deal to take a stake in the Six Nations.
The expected £10.6m loss is over 13 months to the end of the current financial year, with £6.7m lost in the 12 months to to the end of May 2024.