Scottish Life Assurance and the Welsh Rugby Union are in a ruck over a sponsorship deal gone sour.

A major row over rugby sponsorship is heading for the High Court.

The Welsh Rugby Union (WRU) is being sued for damages of more than £250,000 after allegedly pulling out of a sponsorship deal with Scottish Life Assurance.

Scottish Life, represented by Speechly Bircham, claims it agreed to sponsor the Welsh national rugby team's home matches against Scotland and England. It says it agreed to back four matches in the Five Nations Championship, between 1996 and 1999, and to pay £77,500 plus VAT each year. It claims that in return it was to receive advertising rights, it would be identified as the sponsor, and it was to be given 144 tickets for each match, plus luncheon and tea on an agreed cost basis under an agreement reached prior to the sponsorship deal.

But after the agreement was reached in 1995, the team's sponsorship value increased as a result of it gaining professional status.

The writ issued by Scottish life says that last October, Vernon Pugh of the WRU contacted Ian Munro, Scottish Life general marketing manager, and told him that Lloyds-TSB wanted to obtain sponsorship rights to every match in the championship from 1998, including two matches being sponsored by Scottish Life.

Lloyds-TSB was said to be offering substantially more money and Pugh is alleged to have asked whether Scottish Life would consider relinquishing its sponsorship rights for the remaining two matches.

Scottish Life claims that no agreement was reached to vary, discharge or alter the original agreement but says that the WRU later sent a fax saying it was satisfied that the company had relinquished rights to the agreement.

Scottish life claims that the WRU subsequently failed to provide it with sponsorship opportunities and claims that as a result it has lost marketing, advertising and promotional benefits and has also suffered loss of reputation.

As well as damages, the company is seeking a declaration that the sponsorship agreement remains binding and an order for specific performance of it for the 1999 Wales v England match.

See sports special, page 20.