Australia remains hopeful the Commonwealth Games will be saved despite Malaysia rejecting an offer to host the 2026 edition.
The Malasyian government says a $194 million offer towards hosting made by the Commonwealth Games Federation (CGF) wouldn't cover costs.
The CGF made the offer in the wake of Victoria's shock withdrawal as host last July.
Malaysia's sports and youth ministry said on Friday the CGF offer "will not be able to cover the overall cost of hosting a large-scale sports event".
"Additionally, the economic impact could not be identified in this short time frame," the ministry said in a statement.
Malaysia's refusal is a fresh setback for Commonwealth Games hierarchy who have been exploring options to rescue the multi-sport event since Victoria's withdrawal.
Commonwealth Games Australia (CGA) has floated the prospect of Australia co-hosting the next Games, slated for 2026 but likely to be postponed until 2027.
"We remain hopeful that a solution for 2026 will be found," a CGA spokesman told AAP on Friday night.
"Despite the Malaysia decision today, the CGF remains in active confidential negotiations with a number of potential hosts."
The next Games could be scaled down, with CGA chief Craig Phillips recently saying a turnkey solution was probable - hosting the event using existing venues and accommodation.
Outside of Australia, three other as-yet unnamed nations have emerged as potential host candidates, according to the CGF.
In July last year, Victoria pulled out as host of the 2026 Games citing a forecast rise in costs - from between $2 billion and $3b to between $6b and $7b.
But an audit released last week found Victoria's decision was based on poor accounting and would cost taxpayers almost $600 million.
Auditor-General Andrew Greaves found agencies failed to work together to give "frank, full and timely advice" to the government.
The Victorian government agreed to pay $380m in compensation to the CGF, which in turn offered some of that money to Malaysia to step in as host.
Victoria was the second successive Games host to renege on its commitment.
In 2015, Durban was named as 2022 host but 17 months later the South African city was stripped of the Games amid financial problems and missed deadlines.
The English city of Birmingham stepped in to stage those Games.
Australian Associated Press
