The future of Team New Zealand is looking grim after the announcement today that there will be no America's Cup pre-regatta for Auckland.

All racing for the 2017 regatta will take place off Bermuda. The announcement was made on the Cup's official website, which stated, "The America's Cup event format was agreed by competitors and that all racing will take place in Bermuda."

Team New Zealand say they have not agreed on that format.

"Emirates Team New Zealand would like to clarify we did not agree on the format or location of the qualifier because we have still have our case for the previously agreed qualifier in Auckland pending arbitration," the syndicate said on their Facebook page.

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With Team NZ's bid for Government funding hinging on securing hosting rights to the qualifying regatta, there has been suggestion the Kiwi syndicate may be forced to close their doors without a top-up from the taxpayer.

Prime Minister John Key hinted at that on Paul Henry this morning when asked whether the Government would fund the team now that there's no Auckland regatta.

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"I think we're at the end of the road really," the Prime Minister said.

"Of course Steven Joyce will continue to have discussions with Grant Dalton, but the Government's position has been pretty clear.

"With the event being held 100 per cent in Bermuda, that becomes a really challenging issue to go beyond the $5 million we've already put in."

Likewise, Mr Key told TVNZ's Breakfast show the chance of the competition gaining Government funding was "significantly reduced" if there was no pre-regatta for Auckland.

There would be no promotion of New Zealand if the race was held overseas, he said.

"It's going to be very difficult to get the public on side that they think it's a good idea to put more money in."

Responding to the reported comments of the Prime Minister, Taxpayers' Union Executive Director, Jordan Williams said taxpayers have done enough to fund Team New Zealand.

"Taxpayers have already stumped up significant amounts of money in order to support what is a rich sport. The return to taxpayers of propping up a team to go and sail on the other side of the world was always questionable," Williams said.

"While it is unfortunate that Auckland is unlikely to see Louis Vuitton racing, taxpayers will welcome the Government drawing a line in the sand on this one."

The Government was expected to put in $5 million-$10 million into the next America's Cup campaign if Auckland had been awarded qualifying hosting rights - meaning a loss of Government funding is not necessarily terminal for Team New Zealand.

However, they would need to be based in Bermuda for longer now, with qualifiers being there, so costs will increase.

Team New Zealand are challenging a decision by the America's Cup Events Authority to ditch Auckland.

Earlier this month chief executive Grant Dalton said regardless of the outcome of any hearing, "This is not the end of Emirates Team New Zealand."

All teams will compete in a double round robin format for the America's Cup Qualifiers. The top four challengers from the qualifiers will advance to the Challenger Playoffs.

The winner of the playoffs will meet the defending champion, Oracle.

The original decision to hold a pre-regatta in Auckland was strongly opposed by the European challengers, who indicated a preference that all of the racing in 2017 be conducted at a single venue, Bermuda.