The Italian still has two years left to run on a reported £40,000-a-week deal but the Bantams have revealed they cannot afford to pay him.
The Division One side face expulsion from the Football League if they are unable to come up with a financial rescue package by 8 August.
And Law insisted it all hinged on one player.
He told BBC Five Live: "What he (Carbone) has to realise is that in three weeks time there will be no Bradford City Football Club. He will then get a cut of nothing.
"Without the Carbone deal being sorted out we cannot afford to carry on.
"We would not survive if he was to come back."
The Valley Parade club has been in administration since May and could be thrown out of Nationwide Division One before the new season begins if creditors do not accept the package.
And there is a real possibility that this worst-case scenario could play out.
An administrators' report says that Bradford will not be allowed to play in the Football League unless there is a guarantee of sufficient funding for the whole season.
And it warns that "at present such funding is not available".
The rescue proposal from the administrators is for unsecured creditors to recieve 10p in the pound, but it must be accepted by a 75% majority.
If it is not and Bradford are forced to liquidate, the size of their final debt would exceed £35m.
The club owe vast sums of money to creditors like Registered European Football Finance and to players, including Benito Carbone, Ashley Ward and David Wetherall.
The majority of players have not been paid for the last three months.