The World 12s competition, backed by the likes of Sir Steve Hansen and former All Blacks captain Kieran Read, has been dealt a major blow by World Rugby.
Former All Blacks coach Hansen has been one of the biggest backers of the World 12s concept, along with former New Zealand Rugby boss Steve Tew, Read and former South African rugby boss Jake White, which has been dubbed as rugby's equivalent of cricket's Indian Premier League.
Like the IPL, rosters for the proposed World 12s would be determined by auction, with the hopes of enticing new fans to rugby, especially in North America and Asia, in a potential broadcast and sponsorship package reportedly worth up to US$500 million.
However, the 12-a-side franchise competition which was set for a launch in August next year has been dealt a potentially terminal blow by World Rugby with the global governing body saying its stakeholders have rejected the proposal.
"The game's major stakeholders welcome innovative thinking that has the potential to enhance the sport and new concepts are always given full consideration," said a World Rugby spokesperson.
"World Rugby has reflected the views of national unions, international and domestic competitions to the group proposing World 12s, and confirmed that stakeholders do not wish to explore the concept further at this time.
"This is a position endorsed by the World Rugby executive committee and professional game committee, which includes representatives from across the elite men's and women's game.
"The priority for the sport is advancing productive discussions regarding the establishment of a welfare-focused, streamlined and harmonious annual international calendar."
But according to the BBC, World 12s are not yet "raising the white flag", adding that the issue is around the timing of the competition rather than the concept itself.
Newly appointed World 12s chief executive Rowena Samarasinhe told BBC: "World 12s has been, and continues to be, in regular contact with World Rugby.
"The challenges around the international calendar are well known. World 12s is a long-term project and will grow over the years.
"We are optimistic that, even within the restrictions posed by the current calendar, World 12s will be able to host a tournament in August 2022 that includes a number of the game's leading players, who will not be impacted by fixture clashes at that time."