Al Fayed's counterpart Ken Bates offered Fulham the chance to purchase 9.9% of Chelsea Village plc - the highest proportion which Premier League rules would allow.

The arrangement - discussed at Harrods two weeks ago in the presence of a lawyer - would have cost Al Fayed an initial �15m for a 25-year lease.

On top of that Fulham would have paid Chelsea 5% of their turnover minus sponsorship income.

In return, Jean Tigana's team would have received their own changing area, boardroom and commercial facilities at the ground.

The deal would have required a local authority ruling prohibiting Chelsea groundsharing with another club at Stamford Bridge to be overturned.

But now Al Fayed has refused the offer anyway.

"The chairman wrote to Bates declining the offer," a Fulham spokesman told the London Evening Standard newspaper.

"Fayed and Bates are good friends and lunch together frequently.

"When Ken came to see the chairman at Harrods last month he floated the idea of a partial buy-in to Chelsea Village.

"Fayed saw the conversation as a speculative exchange of ideas and was surprised to receive a formal proposal from the Chelsea lawyer the following day.