However, it was "remarkable" that sport funding had increased while other areas had been cut.
"We are fortunate to be in that position and hopefully as the fiscal pressures ease, that is a discussion we will be able to have going forward but right now, the increase of 50 per cent over the last three years is a very substantial commitment."
All codes will have to absorb cost increases or secure more sponsors. Some could also struggle to hold onto their coaches if they are lured by international teams.
Sport NZ will decide by the end of next month which sports it will target for help, and decisions on specific funding will be made in December.
Questions have already been asked about whether some of the six current "targeted" sports, such as swimming, should forfeit money for others such as canoeing and equestrian.
Mr McCully said it was up to Sport NZ to decide how the funding would be allocated, but he was confident it was still enough to retain key players such as rowing coach Dick Tonks.
Sport NZ chief executive Peter Miskimmin told Radio New Zealand today that New Zealand was one of the few countries to still be improving on the world stage, in terms of high performance.
"I think, unfortunately it is a game where we have a limp in our resources, so it comes down to the strategic investment that we make. It's understanding which sports are making progress, who's putting programmes together, what athletes they have in their pipeline, in their system."
He said he thought target funding was here to stay "and it's about placing our resources where we think we can get the best result, and really that's up to the review that's going to take place between now and the end of the year".
Kayaking five-time medallist Paul MacDonald said there were holes in funding for coaches in New Zealand.
"If we want to bring young people through, not just at elite international level, we've got to get coaching in place for all those young ones, and that remains a problem for sport and for High Performance New Zealand."
Sarah Harris, the high-performance director for Equestrian Sport New Zealand, said her organisation had asked for an extra $1 million a year on top of its current $1.2 million. She would not hesitate to accept if the freeze meant the extra money came from another sport, saying some sports were underperforming.
"The funding does make a difference. In terms of Rio, we're aiming for the team gold, and to do that we have to keep running our team as a team.''
Former Commonwealth Games 10,000m gold medallist Dick Tayler said the freeze was fair enough as long as funding was not reduced.
"We performed well with what we got at these Olympics. No matter how much they get, people have still got to knuckle down and train."
Dick Quax, who won silver in the 5000m at the 1976 Montreal Olympics, also said the funding freeze was understandable.
"I think we're going through a very, very tough time at the moment ... and Government largesse can only stretch so far.
"And when we're cutting back on public service, one would expect sport would have to play their part as well."
The six sports Sport NZ currently targets are rowing, cycling, triathlon, sailing, swimming and track and field.
- NZ Herald with APNZ
