Palmeiras says it is no longer interested in signing Ronaldinho, leaving Flamengo as the sole contender to acquire the player.
The announcement Sunday came a day after Gremio, Ronaldinho's hometown club, also gave up on the player, accusing him and AC Milan of demanding too much.
The collapse of the deal made Ronaldinho extremely unpopular in his hometown, where fans protested and a local congressman wanted to declare him persona non grata. Fans in Porto Alegre are calling Ronaldinho "mercenary" and a "traitor" after the player dismissed a return to the club where he started his career.
Flamengo, Brazil's defending champion and most popular club, said its deal with Ronaldinho was 99.99 percent complete.