Councillors at this week's full council meeting voted to continue with the event after considering a progress report from masters games co-ordinator Vicki Kestila.
Her report said the Dunedin (NZ) Masters Games Trust was battling to meet its budget forecasts, having so far raised $191,000 from grants and sponsorship, 72.2% of its $264,500 target.
As a result, the trust had approved a ''very conservative'' budget for next year's games, with a series of savings including using leftover medals from previous games, the report said.
An increase in registration fees had also been approved by the trust, meaning early birds and superannuitants would pay $65, while a standard entry fee would cost $95, it said.
Registrations were expected to raise another $338,300, but the fees were considered an ''at risk'' portion of the budget as increasing fees would probably affect registration numbers, the report said.
The trust therefore expected about 5500 participants to take part next year, about 700 fewer than in 2012, and so far 3789 had signed up, it said.
The update came after the council earlier this year decided to underwrite the New Zealand Masters Games for any future loss, in return for a deal securing the event's future in the city for two decades.
The arrangement meant Dunedin's trust, which is part-funded by the council, would make a one-off $12,500 payment in return for a one-third shareholding in the national body.
The trust also agreed to cover one-third of any future loss, but only up to a maximum of $10,000 in any one year and with an exit clause allowing the deal to be cancelled at one year's notice.
In return, Dunedin's existing franchise agreement - due to expire in 2016 - would be extended until 2036, meaning the city would host another 10 biennial games.
However, the trust was required to report to the council before each games on whether it had reached 85% of budgeted grants and sponsorship revenue.
If it had been unsuccessful, the trust was expected to revise its budget, request a council underwrite of the loss, or cancel the games.
The report to this week's meeting outlined ways the budget had been revised, and said the trust was still seeking additional grants and sponsorship.
The report predicted the trust would still break even or even secure a small surplus, and recommended councillors agree to continue with the games.
Cr John Bezett, the trust's chairman, told Monday's meeting part of the difficulty stemmed from a decline in money available from gaming machine trusts, which had increased competition for the funds.
Despite that, he remained confident the event was ''on track'' to deliver a successful games and break even, ''or maybe even, dare I say it, make a small profit''.
Councillors voted to note the report and proceed with the games.
