The Otago Rugby Football Union has promised to cut $290,000 from its player budget for 2012 as part of the package put forward to save the union from voluntary liquidation.
"We had to bring something to the table. The North-South game was one of those but we also reviewed the player contract budget and it is fair to say there was some easy savings there," Nichol told the Otago Daily Times yesterday.
"It was too high for what they were planning and there were some provisions in there which weren't needed."
Nichol declined to elaborate further but said "60-odd percent" of the cuts had already been made through natural attrition and with the departure of players such as props James McGougan and Halani Aulika and openside flanker Regan Tamihere.
"It is not about individual players having to take pay cuts. What it is really about is Otago rugby selecting from within and just making that fundamental mind shift."
The ORFU spent $1.1 million on players last season, which it conceded was about $400,000 more than it could afford.
It returned a loss of $862,000 for the last financial year and, with debts of more than $2.3 million, the union faced liquidation.
The major parties got together and hammered out a rescue package which will see the union survive.
"If you really do care for something, you don't give up," Nichol said.
Nichol said his first move, when news of the crisis broke, was to ensure all the players were paid.
"By doing that we were able to keep the players together for a period of time which was important. The next thing we worked on was to get a stay of execution.
"Slowly people's mindsets change from, 'should we wind up Otago?' to saying, 'No, no, no, we've got a solution here'."
The ORFU will have to adhere to a tight financial plan for the next three years but Nichol is confident the team will still be competitive.
"The target which we are setting this year, which is not for me to say, is at a mid-range for ITM teams and is absolutely fine.
"They will have a really good team with some strong players ... and will have a competitive team this year."
Part of the deal which has been struck will see a North-South game held at Forsyth Barr Stadium in June, with the proceeds going to Dunedin City Council-owned Dunedin Venues Management Ltd.
The DCC is owed close to $400,000 and Mayor Dave Cull hopes the council will recuperate 50c in the dollar from the charity match.
That will only be possible if the public supports the game.
The best available players outside the All Blacks test squad will be selected for what Nichol described as a "meaningful" encounter which should capture people's imagination.
"We are hoping people will see it for what it is. It fills a really meaningful spot.
"It is not a charity game. It is part of rugby's humble offering to the people of Otago, the council and the ratepayers."
