Zingari-Richmond and Harbour will go it alone next year.
The clubs had been in negotiations about entering into a strategic partnership which would have resulted in them fielding combined teams in all grades below premier level and sharing the costs of a rugby development officer.
However, Harbour stalwart Lance Spence, a strong advocate of the proposed closer ties, was not able to get any traction with the Harbour committee.
"It is unfortunate, really, but some of the Harbour committee members aren't that keen on it,'' Spence said.
"It is definitely a backward step and I worry about the future of the club.''
Spence feels with the dwindling number of quality players available in Dunedin, clubs need to take a more business-like approach to recruiting.
"There is no way clubs will survive unless they get someone to run their clubs. The whole idea with Zingari-Richmond was to employ someone fulltime.
"Zingari are still going to go ahead with that but on a part-time basis.''
Spence has since stepped down as chairman and is unsure whether he will "carry on with the club. I haven't made my mind up''.
Zingari-Richmond president Murray Collie could not be reached for comment. But he told the Otago Daily Times last month he saw the value in stronger ties with Harbour.
"We all have to be mindful of the fact of where club rugby is at the moment and where it could be in the next five years,'' he said.
"I'm sure you'll agree that if player numbers continue to fall off the way they are, we won't be the only clubs that will be looking at something along these lines.''
Zingari-Richmond secretary Jeff Holloway confirmed the club would still look at employing a rugby development officer but on a reduced capacity to help "pull our teams together more strongly''.
