Formula One moved closer to the edge on Tuesday when the governing body said crisis talks with teams had broken down and next year's controversial rules remained unchanged.
Financial experts from the teams association (FOTA) and International Automobile Federation (FIA) had met on Monday to try and overcome a standoff over a budget cap that threatens to tear the sport apart.
"Unfortunately, the FOTA representatives announced that they had no mandate to discuss the FIA's 2010 financial regulations. Indeed, they were not prepared to discuss regulation at all," the FIA said in a statement.
"As a result, the meeting could not achieve its purpose of comparing the FIA's rules with the FOTA proposals with a view to finding a common position.
"In default of a proper dialogue, the FOTA financial proposals were discussed but it became clear that these would not be capable of limiting the expenditure of a team which had the resources to outspend its competitors. Another financial arms race would then be inevitable.
"The FIA Financial Regulations therefore remain as published."
Champions Ferrari have threatened to walk out after an unbroken 60 years in Formula One if an optional 40 million pound ($65.22 million) budget cap, designed to help new teams enter and existing ones weather the credit crunch, is not scrapped.
Renault, Toyota and the two Red Bull teams have also said they cannot accept the rules.
The FIA published its 2010 entry list last Friday that listed Ferrari and the Red Bull teams as confirmed participants, against their wishes, and five other existing teams as provisional.
The five were given until Friday to make their entries unconditional, with a warning that other would-be entrants were waiting in the wings to join the three new teams already confirmed.
Hopes had risen that Monday's meeting might reach an agreement after the FIA said they felt there had been a "large measure of agreement" in talks last Thursday with representatives of Ferrari, Toyota, Red Bull and Brawn GP.
"I think there are still the opportunities this week to resolve the issues and if the issues are resolved then we will be happy to enter," Brawn team owner Ross Brawn had told reporters on Monday.
However the FIA also warned that there was an "element" within FOTA that was "determined to prevent any agreement being reached."