Tasman and Northland have reacted angrily after being told by the New Zealand Rugby Union they will be cut from the Air New Zealand Cup next year.
The union had signalled it was reducing the number of teams from 14 to 12.
Tasman and Northland have until September 5 to comment on the NZRU plan before it finalises its plans for 2009 three weeks later.
Northland has indicated it will challenge the decision legally.
Tasman chief executive Peter Barr said the news today was "gut wrenching".
"We have had our financial issues, but that doesn't make it any easier. It's not a palatable decision, that's for sure," he told NZPA.
He said part of Tasman's predicament had been brought on by the need to meet the NZRU's demands for improving their stadium.
"That cost us $2.5 million and we are one of the only unions in the country that owns its own ground, so most don't have to worry about those sort of costs."
The NZRU said last week their provincial unions would be assessed on a number of criteria, from population and player numbers to financial performance and administration, with the bottom two facing relegation to the second-tier Heartland Championship.
Barr said the players had proven themselves on the field this year and had been hit hard by the announcement, coming just days after they beat Tasman in a major upset.
Northland Rugby Union chairman Wayne Peters said his organisation would be "exhausting all possible remedies" to overturn the decision.
He had not yet received the letter from the NZRU disclosing the union's assessment results, so could not comment on its details.
"For the last two years we've finished in the first 10, so I don't think anyone could reasonably say that our playing performance has been inhibited.
"In terms of registrations we are about number eight in the country. Population base I think we are in the first 10, if not higher.
"Financial matters...so far we have not been provided any additional money from the NZRU other than what we are entitled to, save for a small advance payment."
Peters said he believed any issues the union faced could be addressed and a move to the lower league would be a harsh blow.
"I think it will be, if not the death of Northland rugby, it will certainly be hugely catastrophic. Rugby up here is not just a game, it's hugely part of the community."
Under the NZRU's decision, promotion and relegation will be re-introduced, linking the Cup with the Heartland Championship.
The winner of the Heartland Championship would earn the right to host a promotion-relegation match against the bottom-placed team in the Air NZ Cup.
Barr said with the Cup teams being stocked with professional players, the playoff was "almost a token gesture".
He said once Tasman was relegated it would lose most of its top players.
"These guys will seek employment in a professional competition. It's their livelihood and if they're playing in the (Heartland Competition) they're not going to get paid.
"The gap between the Air NZ Cup and Heartland teams is so wide it would be almost impossible to go up."
NZRU general manager of professional rugby Neil Sorensen said Super 14 players would be allowed to stay with a Heartland team as professional players as long as they were paid by the Super franchise only.
He said for those players who might want to jump ship, the NZRU would sit down with them and their team to discuss their plans.
Sorensen acknowledged the loss of Tasman, coupled with salary caps, could hit the Crusaders' talent base.
"(They) basically become a one-provincial union salary cap as opposed to the Hurricanes who have four provincial salary caps to work with."
He said the NZRU did not want to rush into any decisions to address this, given there were ongoing discussions about the possibility of franchise contracting.
Sorensen said the review process had been inclusive and thorough, but the NZRU was still anticipating a legal challenge from Northland.
"We certainly haven't dragged lawyers in to go through everything we've said or done, but we have followed a very sound process. (However) we have to be ready for that."
Unions have until September 5 to offer feedback on the review before the NZRU sits down on September 25 to finalise its decision.
Other changes announced last week include a mid-August kick-off for the Air NZ Cup, following a "protected window" for the club season. The competition format will return to a round robin format followed by semifinals and a final.
The NZRU also announced a review of the Heartland Championship following the changes to the Air NZ Cup.
