Embattled Bullets owner Eddy Groves has told the NBL he will be handing back his licence after the ownership submission of Brisbane businessman Brian Stephenson fell through.

The Bullets' demise comes 16 months after they won a league-record 28 games on the way to the 2006-07 championship.

Groves had been trying to find a new owner since March after bankrolling the franchise for 10 years.

"The NBL is very disappointed that the Bullets' licence has been unable to be transferred to a new ownership group," NBL chief executive Chuck Harmison said.

"There had been positive signs in recent weeks that the Bullets would be able to find a new owner, but they simply could not deliver the financial guarantees required by the league for a licence transfer. Eddy informed us this morning that he will be handing back the Bullets' licence immediately. Given how close we are now to the start of the new NBL campaign in September, there is now no realistic possibility that the Bullets will be part of season 2008-09.

"Whilst this is a very sad day for Bullets fans and the NBL, we take heart from the fact that we continue to have three strong teams representing Queensland in the league."

The Hawks - formerly known as Illawarra - and Brisbane were among 10 of the league's original clubs when it formed in 1979.

Wollongong were dangerously close to folding in December and January before the club was effectively saved by a community fund-raising effort.

Hawks coach Eric Cooks said he sympathised with Brisbane's few remaining players and coach Joey Wright.

"It's really disappointing news. There's some great players and a great coach who won't be able to continue in the league next season," Cooks said.

"Guys like Mick Hill and Cam Rigby will probably be out of a job, and I feel for Joey and his family because we're from the same home town in Indiana and I've known him for a number of years."

The league also recently lost the Sydney Kings, although the club is now almost certain to make a comeback under new ownership.

"Obviously the league could do without these kinds of setbacks, but I really believe basketball and the league will continue to grow," Cooks said.

"Talent-wise, we're still up there as one of the best countries in the world.

"It's important for our club to fly the flag as the last foundation team, and we want to make sure we operate sensibly and within our means and stick around for a long, long time."