BREATH of Life is at risk of leaving Launceston due to the Launceston City Council's decision not to financially support the March music festival next year.
Festival organisers Opcon had approached the council seeking $20,000 for the popular festival, which was rejected on Monday.
Opcon director Clint Pease said the festival generated $2.3 million in economic activity in Launceston but cost at least $1.3 million to stage.
"We are constantly told that this is one of the biggest weekends in Launceston financially for businesses - pubs, clubs, hotels, restaurants," Mr Pease said.
"The event's margins are getting smaller and we are continually working hard to keep the event viable in a tough economy.
"We go through every possible angle and follow any possible opportunity to keep this event viable."
This could involve a move out of Launceston, Mr Pease said.
"We would love to keep this event in Launceston at Inveresk - it's been a great spot for us," Mr Pease said
"We will definitely keep the event in Tasmania but we now can't look past what other regions may have possibilities for funding to support the event there."
The council has an event sponsorship budget of $378,000 this financial year.
Launceston acting general manager Rod Sweetnam said the council had "a robust and objective process" with specific criteria to evaluate event sponsorship.
"The council's finite funds mean good governance practices are extremely important - particularly as every time it is assessing an extremely competitive field of events," Mr Sweetnam said.
Mr Pease said the 2014 festival line-up would be announced next month.
He said four international acts had been secured for the event to be held over three stages.
Mr Pease said a fourth stage was planned to exclusively hold local talent but that was now at risk due to the council's decision.