FC Barcelona have confirmed on Thursday evening that Lionel Messi will not continue with the club.
The news comes after reports that the two parties had failed to reach an agreement on a new deal.
However, Barcelona have released a statement saying there was agreement on a new contract but it is not possible for it to be signed due to financial rules imposed by La Liga.
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"Despite FC Barcelona and Lionel Messi having reached an agreement and the clear intention of both parties to sign a new contract today, this cannot happen because of financial and structural obstacles (Spanish Liga regulations)," read the statement.
"As a result of this situation, Messi shall not be staying on at FC Barcelona. Both parties deeply regret that the wishes of the player and the club will ultimately not be fulfilled.
"FC Barcelona wholeheartedly expresses its gratitude to the player for his contribution to the aggrandisement of the club and wishes him all the very best for the future in his personal and professional life."
Messi, 34, has been a free agent since July 1, but was widely expected to commit his future to Barca.
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A number of reports claimed that an announcement over a five-year deal was imminent as Messi looked set to stay at the club he joined as a 13-year-old.
However, shock reports emerged on Thursday evening that the situation had changed drastically following a meeting between the club and Messi’s representatives. Barcelona then announced that Messi would not be continuing his career at the Nou Camp.
Messi was set to take a large pay cut to stay at the club to help Barcelona stay under the salary cap imposed by La Liga.
But letting Messi, who is the club’s highest earner by a distance, leave will free up an enormous amount of funding for cash-strapped Barca, who could also be set to receive a cash injection from La Liga's recently-struck deal with private equity firm CVC.
While supporters will not be happy with the decision, it is set to give the club more flexibility over their finances and future moves.
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Both Real Madrid and Atletico Madrid have weekend matches postponed