The sale of Southampton could still go ahead despite the withdrawal from negotiations of the Pinnacle Group, which has been publicly supported by Matthew Le Tissier. Mark Fry, the administrator, said that he had "immediately re-engaged in discussions with other parties that had previously expressed serious interest."

Only yesterday, Le Tissier, the former Southampton and England forward, had expressed his confidence that Pinnacle would complete its takeover this week. But this morning, Fry said for the first time that he was "not confident" that it would happen and, a matter of a few hours later, was proved right.

Salvation for a club that played in the Premier League as recently as 2005 is now likely to come from overseas. Fry has hinted that the business could be wound up as early as the end of this week if a buyer cannot be found, but two consortiums from abroad are said to remain interested, and Fry said today that he remains hopeful that a sale "will be completed within a very short period of time."

However, Pinnacle held a powerful card in Le Tissier, who would have been installed as chairman if their bid had succeeded. Today he blamed their withdrawal on a failure to come to a satisfactory agreement with the Football League over the ten-point penalty imposed when Southampton Leisure Holdings PLC, the club's parent company, entered administration in April. Legal representatives of Pinnacle and the League met yesterday, but there was no change in the League's position that there would be no leave to appeal, nor was there likely to be.

This was something of a volte-face on the part of Le Tissier, who had suggested over the weekend that Pinnacle would accept the points deduction; a statement issued today told a different story. "It is with great regret and frustration due to ongoing issues with the Football League that I and in turn those behind the Pinnacle consortium decided to withdraw our interest in purchasing Southampton Football Club," Le Tissier said. "With the ongoing issues with the Football League persisting, our backers have simply refused to provide the requisite funds to complete the take-over.

"I would like to thank Tony Lynam [who fronted the bid] for all his hard work and the others who have gone above and beyond the call of duty for Southampton Football Club.

"I hope beyond hope that Mark Fry can find a buyer for the club. We were unaware of the issues with the Football League when we entered into our agreement to purchase the club and then coming to light so late in the day has resulted in our backer's decision not to proceed under the terms on offer."

This seems disingenuous in the extreme. Everyone else in football was aware of the issues, and the League had made its position abundantly clear. Many will conclude, rightly or wrongly, that the Pinnacle backing was not, in the end, as solid as had been claimed.

"The Joint Administrators are not surprised by the withdrawal of the Pinnacle Group from the acquisition of Southampton Football Club," a statement from the joint administartors said. "It has previously been stated that the Administrators were not prepared to extend the period of exclusivity that had been granted to the Pinnacle Group and that had expired on 19 June 2009.

"Immediately following the expiry of the exclusivity period, the Administrators re-engaged in discussions with other parties that had previously expressed serious interest. We remain hopeful that a sale of the Football Club will be completed within a very short period of time.

"We appreciate that the sale may appear to have been protracted but it is a complex transaction which involves numerous stakeholders and a satisfactory solution for all parties is not simple to achieve.

"It is positive news that the Football Club should be in a position to pay the wages this week and once again we reiterate our thanks to the staff and players for their continued support.

"As we have made very clear we are working to a very short timeframe, but wish to reassure everybody with an interest in Southampton Football Club that we are working round the clock to try to ensure the survival of The Club."

Lawrie McMenemy, the club's former manager, expressed his surprise at today's development. "I'm just shocked," he said. "It gets worse and worse. I can't believe that a club which was up there with the best in the country is in the situation it is now.

"I'm staggered to hear Matt's bid has been withdrawn. Only two days ago he was saying he hoped to sort it out with the Football League and that the 10-point penalty would not prevent the deal from being done. So I don't know what happened."

Earlier, a second consortium, led by Marc Andrews, the Dorset businessman, had also withdrawn its interest, citing the short period of time available to complete a deal with Fry looking to tie up a sale this week. "My group have pulled out and I have told Mark Fry," Andrews said. "The reason is because they are not comfortable with the time-scale they were given to meet and they were not comfortable with the level of price. With speed comes risk and they see it as too risky at this speed."

Meanwhile, a depleted playing squad is preparing for a 2009-10 season in which Southampton might yet not take part.. David McGoldrick, the forward, has been sold to Nottingham Forest for an estimated £1 million and Andrew Surman is likely to follow - a bid of £1.5 million from Wolverhampton Wanderers has been accepted - but their sales should cover the payment of wages to staff and players, which did not take place as scheduled last Thursday. The contracts of most of the coaching staff expire tomorrow, while Jan Wotte, the head coach, will go back to his previous role as academy director.