Singapore has all but given up hope to become the 18th Super Rugby side, paving the way clear for Japan to land the honour.
It has been hoped that the Asia Pacific Dragons, a team made up mainly of Pacific Islanders and based at Singapore's National Stadium, can be be the first Asian franchise in the southern hemisphere's premier club competition but Japan's blossoming domestic league and geographical reasons have led Dragons owner Eric Series to concede defeat.
Although the South African, New Zealand and Australian Rugby (Sanzar) has not officially announced which Asian country would host the new team in an expanded competition, Series said in a statement on Thursday: "Clearly Japan is a mature, established rugby market, while Singapore is new to the global rugby scene.
"Consequently, we understand that for an established organisation such as Sanzar, and its three Unions, that there may have been a reluctance to break with tradition."
Singapore currently does not have a professional domestic league. In contrast, Japan already been selected as the host nation for the 2019 World Cup.
The Straits Times also understands that the sandy turf at the National Stadium is not a reason for Sanzar to shun Singapore.
Series added: "We would like to thank Sanzar for giving us the opportunity to present the Asia Pacific Dragons proposal, but understand that perhaps the competition is not ready for a fully privately-owned club.
"However, with increased player movement, shortened careers and the economic changes in professional rugby it seems inevitable that this will have to happen and the beneficial changes being seen in the Northern Hemisphere will start to impact Sanzar as well."
However, Singapore could still host Super Rugby matches after South African Rugby Union President Oregan Hoskins revealed earlier this month that Japan's bid proposal had been changed to include Singapore as a host up to four matches in the 2016 season.
Series said: "The news that the Japan team will play matches in Singapore is also welcomed, as knowing that they will need to invest in rugby in Singapore and South-east Asia in order to achieve that, is a consequence we warmly endorse, as this was a key and major component of our proposal."