Otago Rugby Football Union chairman Wayne Graham says the Otago union is working "bloody hard" on its finances but believes the business model around the provincial game is badly flawed.
Graham said the days of unions throwing money around are long gone and Otago would record a small loss for the year.
But he confirmed Otago was not one of the unions which would have to be given financial assistance by the New Zealand Rugby Union.
It emerged over the weekend the Southland union will get an immediate $150,000 bail-out from the national body, and further assistance from one of its key funders - $126,000 from the Community Trust of Southland - after declaring it owed $700,000 and could end the financial year up to $478,000 in the red.
A change manager would be appointed to oversee all aspects of the Southland union's finances and there had been reports that other unions were seeking assistance from the NZRU.
Graham said he had heard rumours about the state of Southland's finances but he was surprised with the size of the debt.
Southland had spent about $2 million on players last season, and that hefty lay-out was coming back to haunt it.
"They were competing against the likes of Canterbury and Auckland and you need a lot of money to do that.
"There were players they were offering contracts to which we just couldn't afford to keep," Graham said.
"With the population we have in the South we are always going to have an uphill struggle.
"But we are nowhere near the Southland situation.
"We are still not that flash but we have been working bloody hard all year to balance the books."
Last year the Otago union recorded a loss of more than $700,000 and Graham said selling Carisbrook, although a financial benefit in the long run, would put a large dent in the accounts this season because of a large hit through depreciation.
He said a small loss would be reported for the year.
"It disappoints me that we will not break even but we are well within the salary cap for next season."
Graham said Otago had spent about $1.35 million on players last season and next season was hovering around the $1 million mark and had left a gap for three or four players to be added to the squad.
The national union had set a salary cap of $1.35 million for next season, down from $2 million two years ago, to rein in unions' costs.
"If provinces no longer had the funding then they can't afford to pay.
"If you're spending all this money on players, then you can't do the amateur game justice.
"That is your biggest responsibility as a union - the amateur game, the kids, the schools, the clubs."
Graham said players in the ITM Cup should be semi-professional and fully professional only at Super 15 level.
"The biggest problem is the model is flawed.
"There is not enough money being made and too much money being spent.
"The salary cap should be in the vicinity of $700,000 to $800,000 but then what is happening is you are on the world market.
"Players don't get paid as much so they go overseas and all of a sudden you are losing talent you want to retain.
"It's a very fine line to find the balance."
