The document, released yesterday by the New Zealand Rugby Union, looks at future funding, management and location of the New Zealand-based Super franchises.
It came about after discussion with provincial unions and franchises and is the preliminary view of the NZRU.
In the document, the NZRU is shown to favour at least five Super 14 teams, and to have an open mind as to whether there should be an additional team.
The New Zealand franchises should be located within the five main centres.
"In respect of Dunedin, the NZRU's preliminary view is that, while it is yet to be satisfied about the financial viability of such a franchise base, it best meets the NZRU's obligation to promote rugby as the game for all New Zealanders," the report said.
The report said there was the prospect of a new stadium which could be the key to unlocking value in the Highlanders market.
Otago Rugby Football Union and Highlanders chief executive Richard Reid said it was an excellent document and would help with the continuity of players in the franchise.
Reid was on a committee which developed the document.
He said players would be centrally contracted but there would still be a fair number of players coming from Otago and Southland.
He said the impact of a new stadium could not be underplayed.
"Just look at Wellington. If you go back to 2000 and then go from there, the impact of the stadium up there has been extraordinary," he said.
"You're likely to get a surge in ground members and the novelty factor for two or three years. [Being] The first covered stadium in the country is going to help."
Reid said the union and franchise would put in submissions by July 25.
The NZRU board would make a decision at the end of September.
He said it was an excellent document at a time when world rugby was entering a new phase.
The report floated the idea of a sixth franchise in the country but did not specify where it would be located.
The NZRU did not favour a full-scale application of franchise licences, as it was too costly and time-consuming.
The strengths of the Highlanders in 2000, such as the University of Otago attracting talent, and strong local support, had eroded in recent years, the document said.
"It is going to be difficult to remedy some of the weaknesses with the existing Highlanders structure, particularly factors such as the size of the player base, the small commercial market, the declining fan support and the local population trends."
But the franchise gives rugby a profile in the region, creates a pathway for players and coaches and gives a geographical spread of professional rugby.
Having one South Island franchise would undermine some of the key strengths of the Crusaders, such as on-field performance, unique team environment and strong commercial ties.
The NZRU subsidised the Super 14 by about $10 million a year, but did not favour private ownership of the franchises.
It was worried private ownership would bring a loss of control by rugby.
The union might consider a minority shareholding by feeder provincial unions within a franchise region.
It also supported in principle the move to an independent management and operational structures for franchises, although there had to be further investigations into timing and cost.
Small numbers of overseas players might be allowed, and matches could be played offshore.
