Scottish Borders Council Leader David Parker has accused the Scottish Rugby Union of failing to get fully on board with Melrose's IRB rugby sevens plans.
The sevens competition will not come to the Borders next year
The SRU has submitted a bid for the tournament but it will be staged - for next year at least - at Murrayfield.
Mr Parker said a five-year £1.8m funding package was in place to bring the event to the Borders in 2007.
The SRU said despite assurances that public bodies would cover any losses it could not rely on those funds.
Chief Executive Gordon McKie said the decision not to go to Melrose next year had been taken on financial grounds.
"The event is going to be loss making and I have always said that we could not use our money, given all our debt, to fund those losses," he said.
"There was a huge amount of effort on the part of the public sector bodies in the Borders to try and reassure us that they would fund, primarily, most of those losses.
"Unfortunately we weren't able to get it the way we were looking for and consequently we could not rely on it."
He insisted that the door was not closed on the Borders seeing the event in years to come.
"We would like to try and put it back into Melrose in 2008 as opposed to somewhere else," he said.
It was hoped the event could generate major income in Melrose
"That said, if we can't do so we need to keep our options open."
The council leader said he believed the SRU was simply not prepared to work in partnership with public bodies.
He said the authority, Scottish Enterprise Borders and Event Scotland had put together a comprehensive business plan and a significant budget.
"We were not looking for any financial contribution from the SRU," said Mr Parker.
"What we wanted, however, was some say and some control about how the event was run."
He claimed the SRU was not interested in that sort of arrangement.
"They merely want a blank cheque to run the event in the way that they want," he said.
"They just simply could not get that in return for public money."
Mr Parker also expressed doubt that the event would ever make it to the Borders.
"It remains to be seen whether the event will take place in Melrose in 2008," he said.
"I don't believe what the SRU are saying on that score."