Team New Zealand's boss says the government's financial offer to host the next America's Cup is not enough to make a deal.
The two parties have until Thursday to exclusively negotiate an agreement that would allow Team New Zealand to defend the prize on home waters.
From then, other countries can put their own bids in to host the challenge.
Team New Zealand chief executive Grant Dalton gave the the Royal New Zealand Yacht Squadron an update on the situation during a closed meeting in Auckland tonight.
It was unlikely an agreement with the government would be reached before the three-month exclusive negotiation period closes, Dalton said.
"There's no deal at the moment. I'm not confident that there will be a deal at this point but never say never. Things do happen at the last minute."
The government's offer was reasonable, but not quite enough, Dalton said.
"We're a distance apart. I think the government have been completely reasonable and they've been easy to deal with."
Both parties wanted the Cup to be in New Zealand, he said.
Negotiations with the government would continue after the exclusive period finishes, but locking it in has become less likely because other interested countries could also pitch for hosting rights, Dalton said.
"In the end, if there's no deal it's not a matter of a door closing, it's a matter of a door still being open and other doors opening as well."
He said the team would spend much of its time in New Zealand, even if the challenge was located overseas.
"In the event we had to go, there seems to be this notion we're about to pack up our bags and move to another country, that's not the case at all.
"We would hope that [if] we have to go that we can have a World Series here, we'll do our summer training here, we'll build our boat here, people are employed and they're Kiwis. So in the end, we're the same organisation."
Dalton said Team New Zealand would stay united regardless of what happened.