THE Hamilton Island Yacht Club (HIYC) has officially withdrawn as the challenger of record for the 35th America's Cup, citing costs of competing as the reason for their decision.

The club sent waves of excitement around the local region and yachting world by launching the challenge immediately after the 34th America's Cup ended in San Francisco in 2013.

Hamilton Island's owners Bob and Sandy Oatley said when they launched the challenge for the Cup it was with the intention of trying to change the competition in many ways.

"Our position as challenger of record gave us the opportunity, through the drafting of the protocol to affect this change [and] central to [that] was the desire to make the participation in the Cup more affordable and more sustainable," Sandy Oatley said.

Bob Oatley re-iterated that the HIYC challenge was initiated with a view to negotiating a format for the 35th America's Cup that was affordable and put the emphasis back on sailing skills.

"Ultimately our estimate of the costs of competing were well beyond our initial expectation and our ability to make the formula of our investment and other commercial support add up," he said.

"We are bitterly disappointed that this emerging team of fine young Australian sailors will not be able to compete at the next America's Cup under our banner."