The deal proposed by the No. 1 athletic footwear and apparel marketer would have begun with the 1998 season and given Nike an apparel license for 15 to 18 teams out of the league's 30 members.
MLB owners reportedly shot down the proposal because of feuding among owners about which teams would be aligned with Nike and because those teams couldn't do in-stadium ad deals with Nike's competitors.
Insiders also said money was an issue, as was the inability to get cooperation from the MLB Players Association, which still doesn't have a labor deal with owners.
The lack of a collective bargaining agreement has greatly hindered the ability of Greg Murphy, MLB's new marketing chief, to close this and many other deals currently being negotiated.
Mr. Murphy, president-chief operating officer of Major League Baseball Enterprises, also was believed to have reached agreements in principle with Reebok International and Starter Corp. months ago. The status of those deals was not known at press time.
Late last week, with another collective bargaining agreement vote expected Nov. 15, MLB insiders were hopeful that potential sponsorship negotiations, even those with Nike, might still reach fruition.
Nike executives, however, said the earliest a deal could now take effect would be 1999, citing the time crunch in manufacturing licensed apparel.