The Royal New Zealand Yacht Squadron said today the event has not been given the same exemption status as other America's Cup teams, despite being an official part of the programme.
The event was a collaboration with the squadron, the China Sports Industry Group and Emirates Team New Zealand.
It was to have been sailed over three weeks early next year around the Prada Challenger Series leading up to the 36th America's Cup.
It had 19 entries from 13 nations, and was estimated to be worth more than $10 million to the New Zealand economy.
Many of the international teams entered had indicated they would be arriving months in advance to train for the regatta.
The squadron's chief executive, Hayden Porter, said they represented the America's Cup sailors of tomorrow and the sailors were "devastated".
The series was to also be the first gender diverse event of its kind. It was fully funded, had been creating jobs for New Zealanders and the teams were also willing to quarantine here at their own expense.
Porter said they were all "bitterly disappointed".
"The sailors, boat builders, sponsors plus everyone who has invested their time and passion into the Youth America's Cup event are all devastated by the Ministry of Business, Innovation & Employment's [MBIE] decision that this event cannot go ahead."
He said reasons given included that MBIE had not invested directly in the event and that New Zealanders could perform the sailing roles for the international teams.
"We are struggling to understand how that is possible as it is an international event and teams have to represent their country.
"Furthermore, it came at no cost to the government at a time where New Zealand needs this type of event and investment."
In a statement, an Immigration New Zealand spokesperson said there was a high bar for granting an exception to Covid-19 border restrictions and Immigration NZ is not able to apply discretion when considering requests.
"Syndicate teams for the 36th America's Cup have been granted border exceptions as the event is a 'Government-approved event'," the statement said.
However it said the Youth America's Cup was not on the list of government-approved events set out in immigration instructions, nor did they meet 'other critical worker' criteria and so were not granted an exception.
The squadron's commodore and owner of Yachting Developments, which was building the specific AC9F yachts for the series, said a huge amount of investment had been made so far.
Ian Cook said the boat design and build project had already taken up a huge amount of time and money from his business and from other New Zealand marine businesses.
"It is hard to face the disappointment we all feel with the event no longer going ahead through no fault of our own.
"It is a big blow to the New Zealand marine industry."
China Sports Industry Group had expressed its regrets at the news, but remained committed to an ongoing collaboration with the squadron and Team New Zealand to promote youth sailing.
Porter and Cook hoped Auckland would remain a venue to one day stage the series once Covid-19 restrictions were over.
