Dunedin Mayor Dave Cull is confident a new rugby organisation will be established if the Otago Rugby Union goes into liquidation on Friday as expected.
The Otago Rugby Union has owes $2.35 million, including to 180 tradespeople and the council, and plans to apply on Friday to the High Court to be liquidated.
Mr Cull says he believes the union's downfall is not the end of rugby in the region.
He says people are moving fast with fundraising to ensure a new union can be established quickly, though he says the council is not party to any discussions on the matter .
The man credited with saving the Welsh Rugby Union from financial collapse says plans to liquidate the Otago Rugby Union and launch a new organisation are short-sighted, and will cost a lot more in the long term.
David Moffett, former chief executive of the New Zealand and Welsh Rugby Unions, says other sporting organisations have turned their books around with much larger debts, so the Otago union could easily be saved.
Mr Moffett says plans to launch a new union are a bad idea as it alienates people to whom money is owed.
He also believes establishing a new union would cost more than repaying the debt.
Meanwhile, the chief executive of the New Zealand Rugby Players' Association, Rob Nichol, says reverting to an amateur domestic competition would erode the success of the All Blacks.
In the wake of the Otago union's problems, some, including former All Black Stu Wilson, claim it is not feasible for the provincial competition to remain professional.
However, Nichol says returning to amateurism would rob New Zealand of some of its most promising talent and decimate playing stocks.
He says having a professional domestic competition is vital to the success of the All Blacks, as many future stars are discovered during the national provincial competition and then commit to staying in New Zealand.