Adem Ljajic will remain with Partizan Belgrade after Manchester United invoked an opt-out clause from signing the 18-year-old. Photograph: Srdjan Ilic/AP

Manchester United's American owners have terminated an agreement to sign Adem Ljajic, the Serbia Under-21 international, in the January transfer window, after deciding that he is too expensive a gamble, 11 months after publicly announcing that a deal had been put in place to sign the player dubbed the "little Kaká" in his own country.

Ljajic, 18, was part of the £16.5m deal that also saw his Partizan Belgrade team-mate Zoran Tosic move to Old Trafford last January. The teenager had been on trial at United the previous October and was regarded at the time as the more promising of the two players but United also decided that he should remain in Belgrade to get some more first-team experience before moving to England.

What was not revealed at the time was that the club also stipulated that a get-out clause was written into the contract to cover themselves before Ljajic moved to Manchester long term, and the club have now confirmed they have used that agreement to pull out of the arrangement.

The official reason is that Ljajic has failed to live up to the hype since he broke into the Partizan team at the start of the 2008-09 season and has not impressed United's coaching staff on his regular trips to Manchester to train with the rest of Sir Alex Ferguson's players. Tosic has also struggled to make a favourable impact, making only five substitute appearances despite being a regular in the Serbia national side.

A United spokesperson said: "We had an option to buy the player but, having closely monitored his development over the past 12 months, and taken into consideration the young players emerging through the ranks at the club, we have not chosen to pursue the transfer."

The decision will, however, raise inevitable questions about whether the club's owners, Malcolm Glazer and his family, have involved themselves in Ferguson's planning for the future at a time when they are making substantial cuts at Old Trafford.

United have accrued debts in excess of £600m and Ferguson has been informed he will be operating under tight restraints in the January transfer window, regardless of the club receiving £80m in one single payment from Real Madrid for the signing of Cristiano Ronaldo in the summer.

The Glazers have implemented wide-ranging cuts and, though it has yet to be confirmed, there is a sense that in their current financial position they might have misgivings about paying such a substantial figure for a largely unproven teenager.

This turnaround, however, is extraordinary given that Manchester United's official website described Ljajic as "Serbia's brightest young talent" when the signing was announced, hailing him as an "attacking midfielder blessed with vision and intelligence". The player, then 17, spoke of his excitement about moving to England, saying: "I first heard they were interested in me about a year and a half ago and spent a week at Carrington training with the first team, which I really enjoyed. I feel very happy to be a Manchester United player. Everyone at the club has made me feel very welcome and I'm looking forward to joining in January."

Tosic has his own problems but has been encouraged by scoring four goals in the last four reserve fixtures, and the 22-year-old was a second-half substitute in the 2-0 Carling Cup defeat of Tottenham Hotspur on Tuesday. "I'm still trying to get used to English football and adapt to the style of the game here," he said. "It's still new for me but I'm getting used to it." Unfortunately for Ljajic, he will not get that chance.