Barnsley Premier Leisure will be hit with a more than 20 per cent cut in the money it receives from Barnsley Council.
The chief executive of Barnsley Premier Leisure, Tim Wilson, warned the reduction will have a 'substantial impact' on the services it can offer.
The council has decided to reduce the amount paid to Barnsley Premier Leisure by £100,000 from April and by a further £100,000 next year.
A council paper shows it paid the not-for-profit organisation £1,031,932 for 2012/13 to operate leisure centres such as the Metrodome and others in borough.
Mr Wilson said: "We will endeavour to keep our current facilities open, but the large reduction in management fee will result in BPL reviewing what services it can offer for the reduced fee.
"BPL has invested heavily over the past two years on its facilities to increase income streams but a cut of this magnitude will have substantial impact on the services we can offer."