It is a blow for Palmer and for tournament sponsors, made even more costly by the decision of some bold souls to make the former world No 1 the focus of all the publicity posters.
They've been caught in the classic Venus flyer-trap.
"We are disappointed to have lost a player of her calibre," Palmer said. "While withdrawals of this nature are part and parcel of sport, we sincerely feel for the fans who will also be disappointed by the news of Venus' withdrawal."
Williams' absence will not affect the seedings. With her ranking having slipped to 103, she was coming to Auckland courtesy of a wildcard.
Local player Sacha Jones has been handed the second wildcard, and Palmer will now decide who will get Williams' card.
It is most likely to go to one of the highest-ranked players who had entered qualifying. That decision will be made in the next few days.
"[The] field is one of the strongest in the tournament's history, with four players in the top 20, the eight seeds in the top 30 and all 24 direct entries in the top 70 in the world.
"This is still an exceptional field despite the withdrawal of Venus Williams," Palmer rationalised.
That may be true, but the mere fact that Williams took pride of place in nearly all the publicity shows what a loss she is.
She added power, she added pedigree and a degree of on-court unpredictability that the other players couldn't.
Yes, top-seed Sabine Lisicki might be a better player these days and is no doubt huge in Troisdorf, but she's not going to sell many Sky TV subscriptions.
China's Peng Shuai has a big heart and a near-impenetrable defence, but it's not quite the same as watching a player with the biggest serve on the women's circuit.
When the Russian Svetlana Kuznetsova is at her pumped-up best, she is capable of taking her game to giddy heights, as evidenced by two Grand Slam titles, but she is also capable of bouts of mediocrity.
New Zealander Marina Erakovic will come into the tournament after a bounce-back 2011.
While it is tempting to say the ASB Classic needs the Aucklander to progress into at least the middle of the week, the truth is that every tournament throws up a number of interesting stories.
This year, for example, Maria Sharapova might have provided the star power, but veteran Hungarian Greta Arn, who almost gave the game away a few years ago, stole the show.
So the stars might not be as bright with Venus in the descendent, but there's still a tournament to be won.