A bid from Sale Sharks and Salford City FC to buy the AJ Bell Stadium has been rejected.
The Premiership rugby club and the League Two outfit have been working on the move since 2021.
The bid was put together after Sale Shark's plans to build a new stadium fell through in 2020.
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In a statement, Sale Sharks said they would remain at the stadium and they are "working very closely" with Salford City Council to "reach a robust agreement".
The decision comes after the council revealed plans to purchase the stadium outright itself.
Sale Sharks CEO Sid Sutton said: "We will continue to have a long-term home at our stadium, however we can confirm that following 18 months of discussions, our proposed bid to buy the stadium as part of a joint venture has been declined.
"We are now working very closely with Salford City Council to ensure we reach a robust agreement that allows Sale Sharks to both enhance and control the matchday experience for the benefit of our supporters, and benefit commercially from matchday activity.
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"We have always maintained that taking control of the stadium is integral to the long-term future of Sale Sharks and that remains the case.
"But equally, we were clear that we wouldn’t proceed with any course of action until Salford Red Devils have secured a place to play.
"Salford City Council’s proposed agreement will enable this to happen while ensuring that the stadium remains the home of Sale Sharks."
In May this year, Sale Sharks set themselves a deadline of August to get a deal agreed.
They also said the stadium title sponsorship deal AJ Bell would not have continued if the deal was completed.
In a statement Salford Red Devils, who share the stadium with Sale Sharks, said: "Salford Red Devils are aware of the council’s intention to purchase the stadium outright.
"We are currently in dialogue to secure a long-term tenure that will present the club with the opportunity to increase match day controls and the associated incomes streams to ensure the long-term sustainability of the club."
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In January, BusinessLive reported that Sale Sharks returned to making a pre-tax profit during their previous financial year.
Salford City FC currently play in League Two and are owned by former Manchester United stars Gary and Phil Neville, David Beckham, Ryan Giggs, Nicky Butt and Paul Scholes as well as Singapore businessman Peter Lim.
A club statement said: "As supporters are all aware we have been in talks with Salford City Council for 18 months to purchase the AJ Bell Stadium.
"However, we were informed in the last two weeks by Salford City Council that they will now purchase the stadium outright and that we wouldn’t be considered.
"Whilst this news came as a surprise to us, we will continue to monitor closely the progression of the purchase, but at this moment our immediate future is to remain at The Peninsula Stadium."
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