The England star wanted to make his loan deal to AC Milan permanent, but Galaxy insisted that the midfielder is heading home after Milan failed to make a second offer by end of Friday's deadline.
Tim Leiweke, President of Galaxy parent company AEG, said: "We didn't receive an offer today. The negotiations are over and we move on. We need David to honour the contract and come home and let's stop the distraction."
"I know David is emotionally invested but I don't think Milan really was that interested in spending the money we would have had to receive to compensate us for our losses. They clearly were looking at this as a football decision and we were looking at it as a football and business decision," The Sun quoted Leiweke, as saying.
"I'm not sure they ever quite understood the magnitude of the losses the Galaxy and the league would have had to bear this season. They were very respectful discussions," he added.
Leiweke confirmed that Beckham has a clause in his contract that would allow him to leave at the end of this year.
"Clearly the risk is we may lose him at the end of the year. Our hope is the team surprises him and we're a lot better than last year."
Beckham's loan deal at AC Milan ends on March 8, with LA's season beginning 13 days later.&13;&13;