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Organisers of the Manx Telecom Bay Festival say if this year's event had gone ahead, the cumulative losses of the event would have totalled more than £2.5 million.
Promoter Jonathan Irving says the inaugural festival in Peel and last year's event in Noble's Park lost a total of £1.6 million because of a lack of support, and with next month's three-day showpiece set to lose another £1 million, he was left with no choice but to call it off.
Mr Irving says he hoped this year's festival could have avoided a similar fate to its predecessors (play audio file):
Mr Irving says anybody with tickets for the festival will receive a refund. For information on how to get your money back, you can visit the website bayfestival.im
Sir Elton John's concert on June 16 is going ahead.
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