Sydney FC will have to start from scratch in their search for a new coach with Graham Arnold deciding against a move to the Sky Blues and re-signing with the Central Coast Mariners.
In a major coup for the Gosford-based club, Arnold seemed certain to depart at the end of the club's Asian Champions League campaign but performed an about-face over the weekend, instead deciding to stay with the club he has taken to back-to-back top two finishes.
The Sky Blues have said repeatedly in recent weeks that they were down to negotiating with a "preferred candidate", which was known within the football community to be Arnold.
The coach himself admitted he was "flattered" to be linked with Sydney and asked both clubs to give him time to finish the Mariners' ACL campaign before making a decision.
Sydney will now turn their attention elsewhere with new majority owner David Traktovenko almost certain to look for a foreign coach to replace Vitezslav Lavicka next season.
Arnold, 48, was reportedly given until the end of today to give his answer to Sydney FC about whether he wanted to take their position after more than a month of negotiations but phoned ahead to say he was declining their offer.
The Mariners had already made contingency plans in the advent Arnold decided to leave, with former manager Lawrie McKinna installed on Friday as the club's technical director and a probable option to take charge of the team on an interim basis had Arnold opted to quit.
Once settling on Arnold as their ideal choice, the Sky Blues believed it a formality that the former Socceroos boss would agree terms despite some initial disparity at the negotiation table over wages.
Adding weight to their belief was the ownership instability that continues to hover over the Mariners, with a Russian conglomerate still yet to take the reins of the club despite signing the takeover papers in January. Chairman Peter Turnbull remains in charge of the club despite ongoing financial difficulties.
It is understood that part of Arnold's demands to the Mariners' hierarchy was that the club invest significant funds in new players and actively seek marquee players, something the side hasn't boasted since the departure of Tony Vidmar in 2008.
The news allows the Mariners to concentrate on their final ACL group stage match next Tuesday, away to Japanese side Nagoya Grampus. A win in that match will enable the Mariners to qualify for the knockout stages for the first time in the club's history.