Magners League side Border Reivers will be disbanded at the end of the season after the Scottish Rugby Union board decided it was financially unrealistic to keep running the team.
The SRU announced the findings of their review of professional team rugby at Murrayfield on Tuesday.
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."
Borders are well adrift at the foot of the Magners League, despite posting a shock victory over Edinburgh last week.
Their crowds have been too low for the SRU to consider maintaining their
investment, and by focusing on Glasgow the national body will look to drum up
interest and consider relocation to a redeveloped Scotstoun.
With the SRU in debt to the tune of approximately PS23million, they insist it was necessary to be ruthless.
A statement from the SRU declared: ``The board decided that, in the context of its significant bank debt, to maintain pro team rugby in Scotland in any meaningful way, it could not provide long-term support to both its existing teams, Border Reivers and Glasgow Warriors, in their present form.
``It recognised that the funding available for these two teams has been spread too thinly, resulting in them, to a greater or lesser extent, struggling to improve their standing in the Magners League and especially the Heineken Cup.
``Hence today's decision to concentrate resources in one team, Glasgow Warriors.''
Edinburgh Rugby Ltd chiefs have criticised the SRU after revealing they were not consulted over the review.
Edinburgh warned last night that any reduction in the number of professional teams ``could have serious ramifications'' for the capital club.
But the SRU are adamant that now was the time to act.
The SRU statement added: ``The board recognised that, unlike other northern hemisphere nations, professional rugby in Scotland has struggled since the sport turned professional in 1995.
``In that period, Scottish Rugby has invested around PS30million in its various pro teams, yet the concept of pro team rugby in Scotland has never fully taken off.
``The board was however united in its belief that if Scotland is to continue to aspire to maintain its status as a top-10 international rugby nation (Scotland is currently ranked 10th in the world), then pro team rugby in Scotland supporting the Scotland national squad, is essential.''
The complete statement released today said, "Scottish Rugby has completed its wide ranging review of pro team rugby and confirmed its commitment to maintain professional rugby in Scotland.
The Scottish Rugby Board has decided to provide additional funding to its Glasgow Warriors pro team to enable it to strengthen and increase the squad size and invest in improved facilities.
This will be made possible by the Board's decision to close the Border Reivers at the end of this season, which will result in a number of Reivers players transferring to the Warriors.
The Board recognised that, unlike other northern hemisphere nations, professional rugby in Scotland has struggled since the sport turned professional in 1995. In that period, Scottish Rugby has invested around PS30 million in its various pro teams, yet the concept of pro team rugby in Scotland has never fully taken off.
The Board was however united in its belief that if Scotland is to continue to aspire to maintain its status as a top ten international rugby nation, (Scotland is currently ranked tenth in the world) then pro team rugby in Scotland supporting the Scotland national squad, is essential.
In carrying out its review, the Board examined levels of investment, pro team numbers and locations, training and playing facilities, squad sizes, relationships with and participation in the Heineken Cup and Magners League, third party investors and academies.
It assessed the current condition of pro team rugby in Scotland in the context of its vision for the future. The Board considers the following to be factors that make for successful professional rugby:
+ A quality playing squad of at least 35 full time professionals able to be competitive all season, including during Scotland international Test periods
+ The funding ability to recruit and retain top players
+ Good training and support facilities
+ Maintaining an Academy structure which takes part in regular back-up games
+ A modern, seated and covered stadium of 6,000-10,000 capacity in or close to a large population, with public access, parking and hospitality facilities
+ A good match day atmosphere, attractive to a TV broadcaster
Strong commercial growth potential
The Board decided that, in the context of its significant bank debt, to maintain pro team rugby in Scotland in any meaningful way, it could not provide long term support to both its existing teams, Border Reivers and Glasgow Warriors, in their present form.
It recognised that the funding available for these two teams has been spread too thinly, resulting in them, to a greater or lesser extent, struggling to improve their standing in the Magners League and especially the Heineken Cup. Hence today's decision to concentrate resources in one team, Glasgow Warriors.
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."
Chief Executive Gordon McKie commented, "A positive long term commitment to the future of the game has been given today and we have agreed on a long term vision for professional rugby.
"As the national governing body for the game in Scotland I believe we need to make better use of our limited resources, to try and galvanize the pro game here in Scotland and offer the sport greater strategic direction in all rugby matters.
"The Board is also announcing today that a Chief Executive for the Glasgow Warriors pro team will be recruited to drive the business forward."
Turning to where the Warriors will play in the future McKie added, "It's well known that Hillhead Sports Club will be seeking planning permission to develop part of their land at Hughenden, where the Warriors currently play. It is not clear how or when this may progress but naturally we are actively considering a number of alternative locations including Scotstoun.
"Last summer the Board ruled out Scotstoun as a future venue because of the design proposals that were put on the table at the time. Were these proposals to change sufficiently, we may reconsider Scotstoun as a venue for the team, along with our other options."
Andy Irvine, the President of Scottish Rugby added,"Today represents an important step in the evolution of professional rugby in Scotland. Along with my Scottish Rugby Council colleagues we fully support the principal of today's Board decision.
"It is very regrettable that the Border Reivers is to close but it's important our pro teams get a chance of success and the only way to do that is to concentrate our resources."