Ken Bates insists he will not be "going away" and still intends to invest £10m in Sheffield Wednesday.
Bates has been looking for another club to invest in after Chelsea
A statement said the club's board and bankers had found Bates' proposals "unacceptable" and that negotiations were "at an end".
But the former Chelsea chairman remains steadfast in his ambition.
"I would like one more challenge. The challenge is to take this club back where it should be and I think I can do it," Bates said.
"I'm not going away because I think the true depths of the problems at
Wednesday haven't been revealed yet - and maybe that's why they won't let me in to see the books.
"But I'll be here until we've done the deal. Mr Allen, the chairman, is a pigeon-fancier, he's not a football man."
Bates has indicated he will remove Dave Allen from his post at the helm as well as incumbent manager Chris Turner, if his takeover was successful.
And he claims to have already lined up a replacement for Turner who will leave Owls supporters "gobsmacked".
The club said Bates had made a proposal last week offering investment, subject to a number of conditions.
But their statement added that the Owls' board did not believe the proposal would be approved by shareholders.
"The bank has also informed the directors that, if the indicative proposal were to be put to them by Mr Bates, it would be refused," the statement read.
"During these negotiations the bank has confirmed that it remains supportive of the existing board and of its strategy for taking the club forward.
"Following a number of difficult financial periods, the situation has been stabilised.
"And the board can, with the support of the bank, see its way to providing the manager with sufficient financial backing to be more competitive and to succeeding in the immediate objective of gaining promotion to the First Division."
The Owls' Trust, a shareholders pressure group, had endorsed Bates when he went public with his interest in Wednesday.
"Our position is quite clear, in that we desperately need investment," said Jim Harrison, of the Trust.
"He is the man who seems to have the best credentials to help Wednesday and it is essential that the board give him a chance."