Crystal Palace has lost their profession to be restored in the Europa League.
The Eagles were relegated by UEFA last month by the conference competition due to rules for several club ownership.
The European football board body considered them part of the same group as Lyon after the deadline of 1 March – despite John Textor, majority owner of Eagle Football Holdings, who sold his interest.
Palace then submitted an appeal to the Court of Arbitration for Sport (CAS) in an attempt to be restored.
However, that has now been rejected.
A panel on a personal hearing in Lausanne, Switzerland, discovered last week that Textor had shares in Crystal Palace and Lyon and was a board member with decisive influence on both clubs at the time of UEFA's assessment date.
It also rejected the argument that Palace had an unfair treatment compared to Lyon and Nottingham Forest.
It is understanding that club officials will consider their legal options.
Crystal Palace therefore stays in the Conference League, where Nottingham Forest holds their place in the Europa League.
The newest development comes as a huge blow to Palace only one day after their victory of the community shield over Liverpool.
Oliver Glasner led the Eagles to their second trophy during the weekend.
Crystal Palace defeated Liverpool on penalties to secure the silverware at Wembley.
The Reds took the lead by the new boy Hugo Ekitike only four minutes in the collision.
Jean-Philippe Mateta then equalized the penalty spot before Jeremie Frimpong Liverpool shot in front.
The Premier League champions kept their lead for the majority of the game until Ismaila Sarr brought the score to the late stages.
Dean Henderson was the hero in the shootout and limited Liverpool to just two goals.
After the game, Crystal Palace -Baas Glasner admitted that he would not exchange the shield for a successful profession.
He said: “No. The players were not afraid of noise around us.
“Tomorrow we have no influence, so we celebrate tonight, meet each other tomorrow for lunch and train and we can't think about it.”
In the meantime, goalkeeper Henderson said: “We win the FA Cup, we are justified to be in the Europa League.
“For football purposes we deserve to be in the Europa League. I think it would unfortunately devalue the competition if we were not in the Europa League.
“Things that are won on the field must be rewarded and I think every neutral football fan would agree. Let's take a look.
'I know the chairman [Steve Parish] Has fought hard against it and we are crossing fingers in the Europa League as we deserve to be.
“I know that fans of Crystal Palace have been waiting for 120 years, perhaps even longer, on the first trophy and opportunity to go on a European tour.
“That's just not good for football to take it away and I think everyone would agree with that. I am sure they will see meaning and put us back in the Europa League.”