Scottish side Border Reivers will be disbanded at the end of the season after the SRU board decided it was unrealistic to keep running three professional teams.
The SRU, who are in debt to the tune of £23 million, announced the findings of their review of professional team rugby at Murrayfield this lunchtime.
They stated that Glasgow Warriors would receive extra funding as a result of Borders' closure. Edinburgh Rugby, financed by brothers Alex and Bob Carruthers, will also continue to operate.
Several Borders players will be transferred to the Warriors for next season. Allan Munro, chairman of the Scottish Rugby board, said: "It was quite clear that we could not continue as we were and something had to be done if we were to maintain and improve professional rugby in Scotland.
"The decision to close the Borders pro team has not been an easy one, as we recognise the contribution our Borders players and coaches have made and their real determination to succeed against the odds.
"But we believe the Reivers closure and strengthening Glasgow Warriors will go some way to improving high performance rugby in Scotland."