"It takes away one of his biggest weapons, his standing start speed, so it was really gutting," said the Canterbury horseman.
"He is at his best when he can lead and then hand up to the right horse but unless we have a miracle, now that isn't going to happen.
"After Kaikoura, I was confident we would be hard to beat with the right run but maybe we are't going to get that now.
"To be honest, it would be a big call to say he could win now."
Dunn says that while knowing Franco Nelson's speed, he can't afford to sit back and gift the race to the seemingly unstoppable All Stars trip of Lazarus, Smolda and Have Faith In Me.
"They could be up front dominating and there is no point just sitting back.
"I think he is tougher than he used to be so if we have to make a move we will.
"But the race really changed for us after the draw, too."
With Franco Nelson unlikely to be able to settle in front of the likes of Lazarus and Smolda they firm even more because the horses stalking them on the markers are likely to be outsiders, rather than genuine threats.
So expect Franco Nelson to drift in the market as all the money comes for Lazarus and maybe closer to race start time Have Faith In Me, who as a Miracle Mile winner will attract plenty of Australian interest in the co-mingled pools. Dunn did have the smallest piece of good news over the weekend with Seel The Deal scratched from the Cup, meaning Franco Nelson now starts directly behind Smolda.
That means Lewy Risk gets a run and Lazarus will now start from barrier four, almost perfect for the horse whose whole Cup campaign could hardly have gone better.
That also brings Christen Me into the outside of the front line, with Titan Banner now to start off one on the inside.
While the Cup market has been relatively calm, one of the biggest group one movers at the meeting has been northern 3-year-old Star Galleria.
After two big win in the Sires' Stakes heats, a dazzling trial at Addington last Wednesday and drawing the best of the favoured contenders he is in to $3.60 second favouritism, just outside Harness Jewels winner More The Better.
While TAB bookies cop plenty of criticism few could argue with the service they have provided for tomorrow's meeting, with all races having been open since Friday night.
Stars in action
What: New Zealand Trotting Cup Day.
Where: Addington.
When: First race at 12.05pm tomorrow.
The money: Lazarus at $1.80 to start one of the shortest Cup favourites ever.