Cardiff Blues and Wales scrum-half Mike Phillips is set to join the Ospreys.
Phillips is set to became one of the highest paid Welsh rugby players
The Ospreys have offered Phillips a reported £180,000 a year deal, and the Blues say they will not break their wage structure to ensure he stays.
"It would be totally unfair to go way above and outside the wage structure just for one individual player," said Blues assistant coach Rob Howley.
"We have to respect the likes of Martyn Williams, Tom Shanklin and Gethin Jenkins who have earned their deals."
Phillips moved to the Arms Park from Llanelli Scarlets at the end of the 2004/5 season as he was tired of playing second fiddle to Dwayne Peel.
The 24-year-old, who would have won more than his 18 caps but for Peel's outstanding Wales form, will be out of contract in the summer.
He has attracted interest from English Premiership clubs and Howley says the Blues have done all they can to persuade Phillips to stay.
"The situation has been on-going over the last three months," Howley told BBC Radio Wales' Scrum V programme.
You've got to ask why the Union wasn't aware this was going on
Former WRU chief executive Steve Lewis
"Mike and his agent have been to see [Blues chief executive] Bob Norster and [coach] David Young and we were aware of Mike's ability to go elsewhere.
"They put the best offer on the table the Blues felt they were able to do.
"The Ospreys have come in and gone way above the market value. Mike really can't say no, can he?"
Howley said the whole transfer market environment is major concern for the Welsh rugby.
He believes the whole issue could and should have been avoided had the Welsh Rugby Union implemented a central contract system when regional rugby was set-up in 2003.
But former WRU chief executive Steve Lewis has criticised his former employers for allowing the bidding war between the Ospreys and the Blues to happen.
"You've got to ask yourself why the Union wasn't aware this was going on because I was certainly aware of it," said Lewis.
We're all disappointed to lose such a valuable player as Mike Phillips who has got an abundance of talent
Blues assistant coach Rob Howley
"The Union should have interceded itself into these discussion. It raises doubts over the rugby nouse of the Union if it doesn't know these discussions are going on.
"It's been going on for days and there are others in the pipeline.
"But the Ospreys can argue that the money they spend on Mike Phillips is actually keeping him in Wales.
"He did have other options from Guinness Premiership sides, which I understand were larger than what the Ospreys offered."
Phillips' exit will leave the Blues will without an international scrum-half, and Howley admits they face a tough task to find a suitable replacement.
"We never thought it would come to this stage," said Howley.
"We're all disappointed to lose such a valuable player as Mike Phillips who has got an abundance of talent.
"The Ospreys are lucky to have such a talented player and it obviously leaves us now with a void.
"We've got young Wayne Evans coming through but obviously we need someone with that number one stripe on his back.
"The pool isn't that big so we've got a lot of searching to do over the next four to six weeks."