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Stephen Vaughan has warned Premiership clubs will have to make drastic cuts in a struggle for survival unless the government agrees to a compensation proposal. The proposal is being drawn up by English rugby’s elite who are facing the prospect of no matchday income until March and a combined loss of £70m.

Vaughan, the Wasps group chief executive, said that without financial assistance, following the decision to put the return of fans to sports grounds on hold indefinitely, his club would lose £500,000 a month and that all options would have to be on the table, including further wage cuts, to avoid closure.

“It is a very grim picture,” said Vaughan, who joined Wasps last year from Gloucester. “The clubs are united in our response to this and a paper is being prepared for the government to consider. If a vital income stream is cut off for months on end, the emphasis will be on owners to dig even deeper into their pockets.

“If they decide that they have had enough of throwing their money down the drain and there is no government support, it would make survival very hard. It would mean nothing was off the table in terms of action that would need to be taken.

“Wages have not been discussed, but those clubs who said they would review the cuts made earlier in the year in January, or later in the season, will have to decide whether that is feasible now. Everyone is in the same boat, which is why we are lobbying the government hard.”

Every club except Exeter was making losses before the pandemic struck but the investment from CVC, which at the end of 2018 bought a 27% stake in the Premiership, was making a difference. As well as losing gate income, and the money raised from the sale of food and drink at grounds as well as hospitality, the clubs face a drop in central income.

Premiership Rugby is in the second half of its player agreement with the Rugby Football Union and the level of payment is subject to the turnover of the governing body, which fears it could lose £60m this year if fans are not admitted to watch autumn internationals or next year’s Six Nations.

“We do not yet know what the new level will be, but any further drop in income will have an impact,” said Vaughan. “There is also concern about how sponsors will react to there being no spectators at grounds for potentially six months.” On Tuesday Qantas ended a 30-year association with Rugby Australia, saying it could not justify spending money on sport at a time when it was making drastic cuts.

Vaughan said: “No one wants to make further cuts to the wages of players, coaches and staff at clubs and it would be very difficult to do unless everyone agreed. The bottom line is what would you do to keep a club, some of which have been around for 150 years, going?

“You would have to make difficult decisions. The reality is that this is a global issue that is not going to go away any time soon. We are currently on a great run and are pushing for the play‑offs, but I would swap all of our wins to be able to have fans back at the Ricoh Arena now.”

Wales will play their rearranged Six Nations match against Scotland in October in Llanelli and will welcome Georgia there the following month. The Welsh Rugby Union has not given up hope of some fans being allowed in.