The 48-year-old went on to enjoy huge success at Stamford Bridge in his maiden campaign by lifting the top-flight crown, while the Azzurri missed out on a place at the World Cup for the first time in 60 years under Gian Piero Ventura.
Former IFF chief Tavecchio is adamant that the four-time winners would be in Russia this summer if Conte had been persuaded to stay on.
"My biggest error was not giving Conte the €2.5m more that he wanted," he told Gazzetta dello Sport. "I would have got it back in three friendlies. Antonio was earning €4m and was asking for €6.5m.
"He would have stayed with the Azzurri and today we would be in Russia, for sure. But is it right to give what we were investing in the youth sector to one man?"
Tavecchio stepped down following Italy's World Cup qualifying playoff defeat to Sweden in November.