Stefano Pesoli has helped the Montreal Impact reached the quarter-finals of the 2008-09 CONCACAF Champions League. ((Graham Hughes/Canadian Press))

In a surprising development, it was revealed Friday that Montreal has rescinded its bid for a Major League Soccer expansion franchise.

In his annual state-of-the-union address ahead of Sunday's MLS Cup final in Los Angeles, league commissioner Don Garber confirmed Montreal had dropped out of the seven-city race to land one of the two expansion franchises that will join the league in 2011.

"They're out for the next round of expansion," Garber said of Montreal. "I don't think it's gone forever but it's gone for now."

The Montreal bid was tabled by Joey Saputo, owner of the Montreal Impact of the United Soccer Leagues First Division, and George Gillett, owner of the NHL's Montreal Canadiens and the part-owner of Liverpool of the English Premier League.

Garber said Montreal's delegation informed him within the past week of possible trouble.

"Montreal has had to evaluate what kinds of private capital they needed to refinance their stadium to fund the expansion fee, and what kind of public support would be available," Garber said.

"I'm not sure they were able to come to terms in this economic environment."

Melnyk and Nash in running

Garber revealed that the league's board of governors met with officials from several other ownership groups that hope to obtain an MLS team, including investors from Ottawa [Eugene Melnyk] and Vancouver [a group that includes NBA star Steve Nash].

Other cities vying for an expansion team are Atlanta, Miami, St. Louis and Portland, Ore.

"Ottawa blew us away," Garber said. "They do give a very focused plan as to where they'd build the stadium. Their presentation was not just about how they were going to build the stadium but how they were going to build the sport."

Garber said Vancouver's presentation was "one of the best I've ever seen, and I was involved in sports expansion in [the NFL]."

But the commissioner warned that expanding into Canada was far from a sure thing, as it might jeopardize the growth of soccer in the United States.

"We don't have a lot of commercial businesses in Canada today," Garber said of league sponsorships. "The more teams we add there, the more it takes away out from growing our footprint and our television ratings in the United States."

Garber said he hopes to make an announcement  in early 2009 about which two cities will be awarded expansion franchises.