"Ultimately our estimate of the costs of competing were well beyond our initial expectation and our ability to make the formula of our investment and other commercial support add up."
Russell Coutts, director of the America's Cup Event Authority (ACEA) said he was very disappointed to receive the news.
"We were excited to have Australia as a challenger and we were also looking forward to the prospect of holding America's Cup World Series events in Australia," said Coutts.
"But our focus going forward is with the teams that have already submitted challenges and the teams that have told us of their intent to do so before the entry deadline on August 8th."
In a competitors meeting held in Los Angeles last weekend, several teams expressed their reservations over the two remaining venue options - San Diego and Bermuda - and emphasised the a lack of certainly around dates and venue was hampering efforts to secure funding.
It appears Team Australia, who were responsible for negotiating the Protocol with the defenders, were finding the going particularly tough.
It is not yet known who the new challenger of record will be, but it is understood the ACEA have already received official entries from Italian team Luna Rossa and Swedish syndicate Artemis - the challenger of record for the 34th event.
Emirates Team New Zealand CEO Grant Dalton said he was disappointed to see the Australian syndicate pull out but said the Kiwi team were on track.
"We have the class rule and the design team is well into its programme; the sailing team continues to compete successfully overseas, with great recent results by Dean Barker and Glenn Ashby in the A class cats worlds and Peter Burling and Blair Tuke still dominating the 49er scene," said Dalton.
"In addition, we have never been in better shape with potential sponsors."
