After Rugby Football Union stripped them of their license for next season’s championship, the Wasps must start rebuilding from the bottom of the league pyramid.
Hopes that new owners HALO22 Limited could restart Wasps in the second tier have been dashed as they failed to meet an RFU deadline to demonstrate the club can still operate at the required level.
Missed commitments include providing evidence of creditor satisfaction and creating an appropriate governance structure.
Wasps also told the RFU that it could not recruit staff or players until additional funding was secured and that it could not recommit to compete in the championship.
Wasps entered administration in December amid debts totaling £95million and were removed from the Gallagher Premiership as a result.
The RFU gave permission to compete in the championship in December after being taken over by new owners, but has now been forced to remove it from the league structure.
“This is not the result that anyone in rugby wanted and everyone associated with the club will be deeply disappointed,” said RFU chief executive Bill Sweeney.
“We have been working with the new owners over the last six months to ensure a solid plan can be put in place to allow the club to continue playing in the Championship whilst allowing players and staff to receive the monies owed to them.
“The RFU is working closely with Premiership Rugby and the Rugby Players Association to ensure players are supported.
“We are also working together expeditiously to ensure the sport emerges from this challenging time on a strong and solid financial footing.”
The Wasps’ descent to the bottom of the player pyramid is another depressing episode in the struggle of English club sport with its shaky financial foundations.
Ambitions for Worcester to start again in the Championship were also ended due to a dispute over terms between their new owners Atlas and the RFU.
Winner of six Premiership titles and two European Cups, Wasps wanted to play their home games at Worcester’s Sixways Stadium and paid Atlas a fee to do so.
London Irish are the latest club to find themselves in a dangerous position as the RFU set a deadline of May 30 to secure their finances or risk being left out of the Premiership.
Leicester and Exeter also felt the effects of the crisis and needed extra funding to stay afloat early in the season.