A draft budget for next year's race means the purse may drop to $100,000, from $127,000.
Despite the projected reduction, the 2016 race is expected to run a deficit of at least $14,000, board members heard Wednesday.
A lighter purse will attract fewer participants to the 1,600-kilometre event, said musher Tamra Reynolds, who entered her first Yukon Quest this year before eventually scratching in Carmacks.
Some 480-kilometre races have bigger purses than the Quest, said the musher from Annie Lake, noting a realistic purse should be "at least what you were at last year."
Rob Cooke, one of about 20 mushers at the meeting, said the race needs to strive for at least a $200,000 purse.
Board president Michael Peterson said plans are in the works to have every finishing musher receive a portion of the winnings.
The meeting heard that two board members chipped in their own money to help with last year's shortfall, but Peterson declined to reveal how they donated.
"The numbers don't lie," said board vice-president Natalie Haltrich, calling the debt "scary" before reminding members of more serious struggles in the past.
"Maybe we do need to revisit how we're running this dog race."
One member even proposed holding a race without a prize purse so the event can deal with its financial woes.
After the meeting, Reynolds said raising the prize purse will draw more competitive mushers, attracting sponsors.
Hiring the right executive director is paramount to the race's future success, she said. That position has been vacated by Laurie Parris, who recently resigned after a year on the job.
However, Peterson downplayed concerns in an interview on Thursday.
"There's been a recurring deficit each year that's just rolled on, essentially since the economic downturn in 2008," he said. "It's become a habit and it is something we have to turn around this year.
"I'm not nervous (about the future)," he said. "We were almost $250,000 (in debt) after the 2009 shortfall. We got out of that progressively.
Peterson said he would be more concerned about global warming, referring to a lack of snow that forced organizers in Alaska to move the starting line of this year's Iditarod Trail Sled Dog Race about 480 kilometres north, to Fairbanks.