Basketball Otago (BBO) will continue to trade but it has amassed debts of more than $100,000.
Deputy chairman Simon Eddy was reluctant to go into specifics until the accounts from the financial period ending December 31, 2013, were audited.
However, when pressed, he conceded the association would record a ''substantial'' deficit for the period.
Asked if the loss would exceed $50,000, Eddy acknowledged ''the final result will be upwards of a $50,000 loss''.
The expected deficit follows reported losses in the two previous financial periods totalling $49,953.
BBO, whose annual income is around $850,000, began 2013 in a tough spot.
For every dollar it owed, it had just 32c with which to to pay it back.
''The reason why we are having a top-to-bottom review of the organisation's structure is because we recognise that ... [BBO] cannot continue to exist if it continues to declare losses, especially when those losses are going upwards each year.''
Last week Basketball Otago announced it had accepted the resignation of general manager Markham Brown as part of a review of its financial position.
Brown will finish up on June 27.
The Otago Daily Times understands another administration position will be lost as Basketball Otago looks to cut costs.
Eddy would not comment on whether there would be job losses, but several well-placed sources have indicated the two fulltime positions are likely to be rolled into one position.
Brown released a statement last week, saying family commitments and the review of the BBO's financial position had prompted his resignation.
He has not responded to an interview request.
''I think it is important to acknowledge that the accounts that are being released for the previous year were prior to the current board being put in place,'' Eddy said.
''The current board has only been in place since earlier this year.
''We are all very keen to release the financials but we have to have them audited first. I would anticipate ... that we will probably be a position to do that in the next couple of weeks.''
In the past, the Otago Nuggets have been a drain on BBO's resources.
They dropped out of the National Basketball League in 2009 because of a lack of funding.
However, the franchise returned ''a small profit'' in 2013.
The bulk of BBO's losses were incurred in its development programme.
''Further work needs to be done for us to take a good detailed look at the loss which occurred in the previous financial year, and indeed the years before that, so we can get a really good grasp of where the organisation is at and what needs to be done to stop the bleeding.
''There is no doubt that when you are running an organisation that declares four consecutive losses, that there is something inherently wrong.''
Eddy does not believe BBO's ''bleak'' financial position will prevent the Otago Nuggets from fielding a team in 2015.
However, he is of the opinion the time is right to separate the two bodies.
BBO is a 100% stakeholder in the Nuggets.
''Part of the ongoing discussions we are having do include looking at the way we manage and run the Nuggets franchise.
'' It is quite normal in other parts of the country that NBL franchises run as a separate entity from the association.
''We are absolutely committed to the Nuggets but how the structure will look at the end of the review, I don't quite yet know.
''But we are working through the review with an absolute sense of urgency.''
