Stars & Stripes are now unlikely to reach the America's Cup start-line in Auckland next summer, after being denied permission to borrow a boat from a foreign team.
An independent arbitration panel has turned down the Americans' bid to use a boat built by another team outside the United States.
Stars & Stripes don't have their own, and are fast running out of time and money to get one.
The America's Cup Deed of Gift contains a "constructed in country" requirement, which means Stars & Stripes can only use a boat built in the United States.
They had hoped to find a way around that rule and possibly use 'Te Aihe' - Team New Zealand's first-generation AC75 - in the challenger series.
But their case has been dismissed by the panel, which has sent them a bill for the cost of the hearing.
The result represents a setback for the event, which will now likely proceed with only three confirmed challengers - Ineos Team UK, Prada from Italy and American Magic.
"The Arbitration Panel have a very transparent and robust process that recognises the America’s Cup and all of its relevant documents, so we clearly respect their decision on this matter," says Team NZ.
"We are disappointed that Stars & Stripes will not make it to Auckland, as they have been working hard for a long time, and have no doubt their focus will now turn to AC37."
The winners of the challenger series will progress to face Team NZ for the Auld Mug, which they captured off Bermuda three years ago.
