Tim could there not be an insurance cover on a pay as you play basis? I agree Sheffield has loads of room for multiple clubs. These multiple clubs still need the resources to be funded and where required coaching etc I think this is many teams down falls, purely not having the people who either were initially able to give their free time or sourcing others to do so.
A way forward for Sheffield would be to hit the Rugby Union Clubs and try and get Summer sides from these up and running. If this could be achieved then you could have a small city comp for these Union Clubs initially. With the number of Rugby Union teams throughout Sheffield you could easily have a 6-8 Team League.