Plans for the multi-million pound redevelopment of Hazlehead Golf Course in Aberdeen have been dealt a blow after the consortium appointed to lead the project pulled out due to a lack of financial backing.

Aberdeen City Council (ACC) selected The MacKenzie Club (TMC) as its preferred development partner for the scheme in September last year, but TMC has now said that it has been unable to attract enough external investment to make the scheme viable. TMC's plans for the 245-acre (99-hectare) site included the complete overhaul of the two 18-hole courses and the nine-hole course, as well as the construction of a Professional Golf Association (PGA) golf academy, a clubhouse and a five-star hotel.

According to a report to be presented to a meeting of ACC's full council next month, TMC will request permission to take control of Hazlehead's No1 course in order to carry out a three-year upgrade project before negotiating a long-term lease. The council will also be warned that any plans to re-launch the tendering process for the course's redevelopment in the wake of TMC's decision may not attract enough potential investors due to the current economic climate.

ACC leader Kate Dean said: "We always said we would only go ahead with the redevelopment after the closest possible scrutiny by the council and by our external advisors to make sure it offered the best value for the council and a good deal for citizens. "We gave it every chance to succeed – so long as The MacKenzie Club was able to come up with the financial assurances we needed. Sadly, and through no fault of their own, that proved to be impossible."