Welsh Rugby Union (WRU) bosses are facing calls to resign following the announcement it had suffered an £18m loss for the latest financial year.
The WRU also warned it is forecasting a similar loss for next year with chief financial officer Gavin Marshall admitting the organisation "can't go on like this".
Soaring operating costs, lower ticket sales and reduced fan spending have been blamed for the latest losses.
The Union said the figures prove running four professional clubs in Wales is unsustainable as it looks to cut the number of regions to three from 2028.
Former Wales international Alex Cuthbert has criticised a "lack of leadership" from the WRU while Swansea council leader Rob Stewart accused to the organisation of mismanagement.
"I'm really clear on what needs to be done, the chief executive [Abi Tierney] and the board need to go. They've completely mismanaged the game in Wales," Stewart told Radio Wales Breakfast.
"I'm not surprised by the financial situation. [We've got] half-empty stadiums at the national stadium, fans voting with their feet and we've seen some of our best players drift over the border into England.
"[There has been] complete uncertainty in the game for over 18 months and the WRU is changing its plans on a quarterly basis, it appears.
"All of those things contributed to the financial state and it is mismanagement, let's call it what it is.
"What we need though is certainty. We've got enough quality players in Wales to sustain four sides. We've got enough income going into the WRU to sustain four sides. They just need to manage it better."
- Scrum V: Is Welsh rugby living beyond its means?
- Tandy on copping flak and his tough Wales calls
- Can people fall back in love with Welsh rugby?
Marshall admitted the £18m loss - compared to £7.2m the previous year - was hugely disappointing and that the WRU board "would take accountability".
But former Wales wing Cuthbert told the Scrum V Podcast the figures raise wider questions about leadership and the long-term direction of the game.
"They [WRU] are going to lose another £16m next year," said Cuthbert.
"The lack of ticket sales coincides with probably losing 18 straight games and not having the most successful international team, but that is their role.
"If a company was losing that much money over that period of time there would probably be quite a few changes.
"What it shows is a lack of leadership and probably a lack of communication with the public as well. Big decisions have got to be made over the next couple of months."
Cuthbert also questioned the way the WRU has handled plans to reduce the number of professional regions.
"If they had come out when they announced the One Wales strategy and said, 'this is going to be painful, but we have to go down to three', then of course there would have been a backlash," he added.
"But a few years down the line you might have got some people on board. Whereas we've gone from four to two at one point and now to three."
Ospreys play at their newly-renovated St Helen's for the first time on Saturday 24 October in a Welsh derby against Dragons.
And Stewart has defended the council's decision to invest in the stadium, despite uncertainty over the Ospreys' long-term future beyond June 2028.
"We did have to decide if we were going to allow the stadium to continue to deteriorate or are we going to invest in it," he said.
"It's a fantastic community stadium and it's going to be used not just by the Ospreys but by [Swansea], university teams, by our community teams.
"The whole model we've built around this stadium is something the WRU should look at for other locations around Wales.
"It's a really sustainable way of delivering not only first class and elite rugby in Wales, but community rugby."