Malta has pulled out of the next America's Cup regatta in Auckland in 2021.
The withdrawal of the Malta Altus challenge leaves just syndicates from Britain, the Netherlands, Italy and two from the United States competing to race holders Team New Zealand for sport's oldest trophy.
"This is a disappointing outcome," TNZ chief executive Grant Dalton said in a statement on Friday.
"The Malta Altus Challenge had a strong foundation with some highly experienced and reputable America's Cup personnel linked to the team.
"So, for them to pull out is not just a shame for the event but also for those people that have worked so hard trying to get this challenge to the start line.
"We hope they will continue to build on their foundation over the next 18 months with a view to the future and challenging for the 37th America's Cup."
Team New Zealand won the America's Cup from Larry Ellison's Oracle team USA in Bermuda in 2017 in foiling catamarans, although the next regatta will be raced in AC75 class foiling monohull yachts.
Malta was one of the three late challenges accepted by TNZ and the Challengers of Record Italy's Luna Rossa in March, which required an amendment to the Cup protocol.
All three teams were required to pay a $US1 million late entry fee, with $US250,000 paid on 1 April and the remaining $750,000 due by 1 Oct.
The America's Cup, considered the pinnacle of yacht matchracing, has struggled to attract challenges in recent years with budgets blowing out in excess of $100 million.
TNZ said last November they had been vetting eight entrants for the next regatta.
The withdrawal of the Malta challenge was a disappointment according to Challenger of Record chief executive Laurent Esquier.
"We are wanting the (challenger series) Prada Cup to include as many teams as possible," Esquier said.
"While we have done all we can to support the Malta Altus Challenge, they haven't been able to bring together all the layers of complexity that are needed to continue with an Americas Cup challenge.
"We are still guaranteed to have an exciting and highly competitive Prada Cup to select the final challenger to race against Team New Zealand."