Shahid Khan’s decision to withdraw his offer to buy Wembley has been described as a “huge disappointment” and a missed opportunity by two of the biggest sponsors of grassroots facilities.

The Fulham owner had offered the Football Association £600million in cash for the stadium, as well as letting it keep the Club Wembley hospitality business, worth another £300million.

FA chairman Greg Clarke and chief executive Martin Glenn were both strongly in favour of the deal and wanted to use the money to fix England’s dilapidated changing rooms, water-logged pitches and stretched 3G facilities.

They hoped Khan’s £600million could be the catalyst for a total investment in community facilities over the next 20 years of £3.3billion, more than double what the Football Foundation and Sport England have been able to do since 2000.

But in separate statements, Glenn admitted the proposed sale had been “more divisive than anticipated”, while Khan said it had become clear “there is no definitive mandate to sell Wembley and my current proposal, subsequently, would earn the backing of only a slim majority of the FA Council, well short of the conclusive margin the FA chairman has required”.

This has been on the cards ever since last week’s council meeting proved just how split football was on the idea, with some seeing it as a gilt-edged opportunity to solve one of football’s most expensive problems, while others likened it to selling the family silver and questioned the FA’s ability to invest the windfall wisely.

The UK’s largest sports charity, the Football Foundation, would have been the vehicle the FA used to pick, manage and fund the projects, as it currently does with the funding it receives from the FA, Premier League and government.

In a statement, it said: “News that Mr Khan has decided to withdraw his offer to buy Wembley should come as a huge disappointment to community footballers everywhere.

“Football participation in this country is huge. Unfortunately, those who play the game, simply for the love of doing so and for the health benefits are having to put up with a stock of community football facilities that is in a shameful state.

“This would have been a once-in-a-lifetime opportunity to make considerable inroads into probably the most pressing issue facing football in this country.”

Nick Bitel, the chair of Sport England, the government agency that funds grassroots sport, was more measured but his disappointment was equally plain.

“We agree with the view that the Wembley Stadium offer was a huge opportunity to boost funding into the development and maintenance of artificial and grass pitches up and down the country,” he said.

“Now that this deal is off the table, we hope the football family will now consider other ways the much-needed additional funds for grassroots facilities can be generated.”

Sports minister Tracey Crouch told the BBC she was “very disappointed” but a spokesperson for the Department of Digital, Culture, Media and Sport told Press Association Sport it was always “a matter for the FA” and any deal “would have had to further benefit the grassroots game in this country”, while the stadium remained the home of English football.

For Clarke, Glenn and Khan, that was exactly what was on the table.

Former FA chief executive Mark Palios encouraged the organisation to still push for a sale and urged those against the plan to put emotion to one side and “look at the facts”.

“It’s interesting to see Shahid Khan has said that the door remains open,” Palios said on Radio 5 Live.

“It’s just that the general sentiment was not sufficiently positive which was why he stepped away.

“I think people should look again at the figures, they should look at the facts and then, based on that rather than on emotion, within the Council of the FA they should look at it and see what the board has actually said. I agree entirely with what the board said.”

Palios described the collapse of the sale as a “massive concern” for the grassroots game.

“i think it’s the biggest issue that faces the FA at this point in time and that is the state of grassroots within the country,” he said. “It’s still in a parlous state.”

He added: “There is a lot of money within football. That money isn’t available at this point in time to grassroots. Should the Premier League be putting more money into grassroots? Yes, of course, I’d say that’s exactly what should be done.

“Having said that, this is an opportunity and they are not mutually exclusive. You can still get more money, you can still tax agents or whatever the situation is as well as use an asset that’s on your balance sheet to fund what you’re about and that’s to keep football going in this country.”