Bolt's camp, the Mariners and Football Federation Australia had been seeking a commercial partner to increase the amount of the offer.
Unable to find a third-party backer, the Mariners were nowhere near the $3 million price tag Bolt's agent Ricky Simms reportedly demanded for his client's proposed one-season spell in the A-League.
The FFA also refused to contribute to Bolt's salary through its marquee player fund.
The failure to agree to a deal has reportedly seen Bolt give up on his goal of playing professional football in Australia - a decision commentators have described as "mystifying," criticising Bolt for never being serious about playing professional football in Australia.
Fox Sports football commentator Simon Hill said Bolt's decision was confusing.
"It's probably a good moment for the two parties to go their separate ways," Hill told Fox Sports News.
"The Mariners have a big season to concentrate on. They don't need this. This is a distraction, quite honestly.
"Usain Bolt, if he's going to continue his football career, is going to have to go and find a contract elsewhere.
"I'm slightly mystified by how this has all developed from Bolt's point of view. He said all along that he desperately wants to be a professional footballer and he's had two opportunities now to do that. He's had the Mariners deal and of course he was offered a contract by Valletta, a club in Malta, and he's knocked them both back.
"So I do question as to whether it's about the football or is it about the bigger contract?"
Currently in Melbourne, Bolt is expected to return to Europe for a pre-arranged appearance.
Mariners owner Mike Charlesworth defended his club's decision to stand its ground in its contract negotiations with Bolt.
"Despite the fact that we could not come to an agreement that would continue Usain Bolt's football journey with the Central Coast Mariners, we've been thrilled to have the Olympic champion sprinter and world record holder as part of our Club for these past eight weeks," Charlesworth said in a statement.
"For the Mariners, it's been a pleasure to work with Usain as he pursued his desire to become a professional football player.
"This has been a mutually beneficial partnership that brought an increased level of excitement and attention to both the Mariners and the A-League. From day one, Usain dedicated himself to being part of the Mariners. He integrated very well into the team and made great strides as a footballer.
"Most notable, was his performance in Campbelltown where he scored two goals helping the Mariners secure a 4-0 win against Macarthur South West United.
"Whilst we understand that Usain will not be part of the Club going forward, the Central Coast Mariners wish him all the best in his future endeavours and we hope that opportunities arise to collaborate in other capacities in the future."
