Fulham owner Shahid Khan made the bid, which would have seen the huge sum invested in grass roots football, but due to opposition he has withdrawn the offer.
A meeting had been set for the FA Council to vote on the matter, but after it emerged that it was unlikely to be approved, Khan cut his losses and the stadium will now remain under the FA's ownership.
Critics have suggested that there was an internal plot to bring down the bid, for ideological reasons, however current Chief Executive Martin Glenn has refuted this.
One man who is clearly angered by the situation though is former chairman Dyke, who favoured the deal taking place.
"The trouble with the FA Council is that it is full of complete tosspots who don't want change," the 71-year-old said in an interview with 'The Times'.
"Selling Wembley was an attractive proposition but you have to be certain you can get that money into the right parts of the grassroots of the game.
"If you have people competing for the money, and then others like the EFL saying they want 25 per cent of it for their own clubs' projects, that starts to muddy the waters.
"You have to have sympathy with local government - they have been cut and cut, year on year. You can't even be sure they will pay match funding.
"That's why the Parklife scheme in Birmingham died, they had no money and couldn't pay their bit of match funding."