The New Zealand Rugby Union has announced a workshop next week to look at the future of the Air New Zealand Cup, including the number of teams in the competition, promotion-relegation and the salary cap.
Reid applauded the move by the national union to have the workshop, saying since the decision in October to maintain 14 unions, things had changed considerably and the world economy has gone "to the toilet".
The game was struggling to fund two levels of professionalism, and in all reality in the south it was only possible to fund one professional team.
"In some cases in Otago we are paying fringe players to make themselves available . . . or we are paying guys to go to university before they go into employment.
"When you compare this with the business world, you wonder why we are paying them ," he said.
The Otago union was moving towards having its provincial team semi-professional, and if players were good enough in that team they would earn a Super 14 contract and become a fully professional player.
He said the national union had two options.
It could either reduce the number of teams, which would cut down on travel costs and player wages, or reduce the salary cap.
Reid said the union would most probably look at doing a combination of these two things.
Cutting the number of teams lessened the wage bill, which was a high component of costs.
The salary cap of $1.5 million was too high but the problem was many unions saw that as a target, and paid too much for players.
"Some unions can afford that but most of them can't. You've got to spend the money further up the tree. And that's fair enough.
"It's like any job. If you're better at it, then you'll get paid more. So if you become a Super 14 player, then you can become a full-time rugby player.
"But we can't afford to be paying full-time players at two levels."
Reid said when the Air New Zealand Cup first started, unions had to have 26 contracted players and with injuries that number could go past 30, which was economically unsustainable.
"I don't think it was anyone's fault. It just happened."
He could understand non-franchise unions wanting to keep the provincial competition intact, and said the pathway to the top would be the same.
"First, you would play club rugby, then Air New Zealand Cup and then on to the Super 14 and the All Blacks. That is not going to change."
Many players were staying at their home union, and playing for their franchise, so provincial unions could remain strong.
He stressed the need for there to be automatic promotion-relegation as it was too hard for teams in the lower division to get up to the top division in a one-off game.
With talks in Dublin this weekend likely to shape the future of Super rugby, Reid said the competition's structure would become clearer once it was known what the franchise-based competition was going to look like.
He said there was no chance of losing the provincial competition.
