Oracle boss Sir Russell Coutts has confirmed Team Australia intends to withdraw from the America's Cup.
The syndicate was the Challenger of Record under the flag of the Hamilton Island Yacht Club, Australia.
''We are very disappointed to be receiving this news,'' Coutts said.
There has been speculation of uneasiness about the direction the regatta was taking, though Team Australia was involved in the protocol process as the Challenger of Record alongside holders Oracle.
"We were excited to have Australia as a challenger and we were also looking forward to the prospect of holding America's Cup World Series events in Australia," Coutts said.
Team New Zealand said the challenger's withdrawal was another demonstration of how tough the game was.
When announcing their intention to withdraw, the Hamilton Island Yacht Club said money was an issue.
"The Challenge was initiated with a view to negotiating a format for the 35th America's Cup that was affordable and put the emphasis back on sailing skills.
"Ultimately our estimate of the costs of competing were well beyond our initial expectation and our ability to make the formula of our investment and other commercial support add up."
Losing the Challenger of Record is a significant blow to the event. But the people running Oracle have only themselves to blame. They have played ducks and drakes over the rules and over the location of the next event.
Team Australia has clearly had enough of the dictates from Oracle, and the escalating cost to compete on what will be anything but a level playing field. The Hamilton Island Yacht Club folk have walked away, and who can blame them?
What would really stick it up Oracle now would be for Emirates Team New Zealand and the Team Australia people to get their heads together to promote an alternative competition, based on the rules of the last event in San Francisco. Larry Ellison might just end up with the Auld Mug, but with no one who wants to play his silly games.
Doesn't Team New Zealand still hold the Louis Vuitton Cup? Perhaps a phone call to Bruno Trouble, so long associated with the Louis Vuitton Cup might be in order. You can just imagine it:
Bonjour Bruno; Dalts here...