After years of decay, Bristol had gone into receivership, the ground had been sold, and the players, those that were left, hadn't been paid. Even Arnie, the club cat, had done a runner following a record 76-0 defeat to Sale.
So how come a man regarded as one of the best coaches in the world finds himself at a West Country trouble-spot with the prospect of long hauls to places like Fylde, Rotherham, Wakefield and Waterloo?
"It's quite interesting how it happened," Dwyer said. "A friend said he wouldn't mind buying a rugby club and building it up. I suggested Bristol. Of all the clubs they have the most potential. I looked into it but then he decided he didn't have the time. My name became associated with Bristol although I hadn't been talking to them at all."
When Malcolm Pearce , a local businessman and a lifelong Bath supporter, took over the club last week, he offered Dwyer the post of director of rugby. Within two days the Australian had outlined his vision of Bristol's future and had spoken to the players. "I had already gone on record as saying that British rugby had to have Bristol as a leading club. It didn't make any sense that one of the few real centres of rugby in the country didn't have a viable Premiership team. When it came to the crunch I had to put my body on the line. I had to be part of it."
It was as if Bristol Rovers (who will share the Memorial ground with a club now called Bristol Rugby Ltd) had signed Alex Ferguson after the Scot had been sacked by Manchester United. The analogy arises because Dwyer, who coached Australia to World Cup triumph in 1991, was dismissed by Leicester, a Man U of English rugby, in bewildering circumstances last season.
They were certainly bewildering to Dwyer. "They refused to give me an explanation. I could mention bits and pieces but none of it would add up to a satisfactory reason. We were going great guns at the time. We were playing better rugby, we'd scored more tries, more points and won more matches than ever."
Dwyer, who had served 16 months of a two-year contract, had no inkling of the Night of the Long Knives. "I had made a suggestion about the next stage of development and they said 'fine, move it along'. I was going to present it to the board when Peter Wheeler [the chief executive] said there were lots of things on the agenda and rather than wait around I should go home and he'd give me a call. Later he rang me and said he had some bad news."
When Dwyer began talking about a financial settlement, there was more bad news. "They did not make things easy. We went backwards and forwards over the terms of the contract. At one point they said I hadn't really been sacked but that my duties had changed. They didn't have any idea how to implement the decision. It was totally undignified. One condition they came up with was that I couldn't coach another club. It dragged on for three months and I was hamstrung. It was ludicrous and nothing short of petty.
"If I had an opportunity to return to Leicester with an opposing team I think the crowd would welcome me back. I'm extremely grateful for their support. It was an important part of my stay at Leicester. Most of the squad were also sympathetic and a view expressed was that they had become better players."
Dwyer said he had "completely changed the culture of the team". By replacing him with Dean Richards, a Tigers icon, Leicester were reverting to a comfort blanket. "Outside of their own people they couldn't understand that somebody else had a genuine interest," Dwyer added.
He sold his place in Leicester and used the money to build an extension to his house in Coogee, Sydney. He thought about staying in Australia but at the age of 57 he has, if not something to prove, then unfinished business. He admits that his sudden exit from Welford Road "hurt like hell". It probably still does.
"I came here because I thought the biggest changes in world rugby would occur in Britain. I didn't realise so many people would raise so many obstacles. A European League has to happen at some stage and therefore it will. What we need is a highly professional, high-income game but in my view we have to play fewer matches for the same amount of money. At the moment we have the Band-Aid approach. We need more money, so we play more matches but that isn't going to help players reach a higher level. I'm just going to press on with a micro-problem in a macro-picture."
At Bristol he will renew acquaintance with Jack Rowell, the former England coach, who joins the new board as a non-executive director. "I haven't had time to talk to Jack, but I want him to be closer to it than perhaps he imagines. He knows his way around a rugby pitch. One of the giant problems is that not many people understand the level players need to reach or can aspire to. Jack understands. We can be frank with one another without worrying about hurting each other's feelings."
Yesterday Dwyer was in a Sky TV studio commentating on the Tri- Nations climax between South Africa and Australia; today he and his fellow coach Darryl Jones will have a better idea of what they have got when Bristol play Harlequins at Osterley. Among those who have left are the internationals Robert Jones, Kevin Maggs, Josh Lewsey and David Corkery. They are also without the flanker Craig Short who damaged a shoulder in training and will be out for 10 weeks.
"The plusses are bigger than the minuses," Dwyer said. "Guarantees have been lodged with the RFU and my first statement to the players is that they are in a much stronger financial position than they have ever been. They will be paid under the old contracts and new ones will be negotiated before the New Year. I told the owners not to do anything with me that they wouldn't do with the players."
Dwyer will sign a one-year contract. "I'm happy to be judged on that and if they want me to stay I''ll be happy to discuss that as well. My first aim is to build a talented, viable squad and then set about establishing a good position in the league.
"We haven't got much time and we might not be able to finish the first step before accomplishing the second. We want to be ready when we go back up and as the Premiership will be even stronger in a year's time, it's a moving target we are trying to hit."
With Bristol shipshape, and Dwyer and Rowell on board, there's no shortage of volunteers for the crew. "There are droves of players around on the pounds 30,000-40,000 mark who are worth pounds 15,000," Dwyer said. "What we want is somebody on pounds 15,000 who wants to play and who in the future will be worth pounds 50,000. We want the right guy in the right position at the right price. What interests me is that we are starting with a clean slate and the commitment is huge. My role is to help people realise their potential and I feel good that they feel good about that."
Since leaving school in 1957, Dwyer has been involved in rugby. "For 37 of those years there was no money," he said. "And 27 of those years were spent outside international rugby. If I was driving past a field anywhere and there was a game of rugby I'd have to stop and have a look. I don't need to be on the big stage all the time. I don't have a great ego as a coach but I want to test my abilities all the time. I really like coaching a rugby team."
Arnie, the cat, by the way, has returned to the Memorial ground.