Petr Nedved is more likely to play in Prague than in Pittsburgh this season because he played four games for a low-level Czech Republic team.
Nedved's play with third-division Novy Jicin means he must clear waivers before the Penguins can sign him. The free-agent center rejected a $14-million, five-year offer and the two sides remain $900,000 apart.
Nedved, 26, a 40-goal scorer, is almost certain to be claimed by another NHL club, so Penguin General Manager Craig Patrick ended negotiations after the NHL's ruling.
Nedved's agent, Tony Kondel, rejected suggestions he gave the center poor advice about the contract offer and league rules.
He said Novy Jicin's level of play is too low to be considered a league, and Nedved never signed a contract with the team.
The NHL said Nedved violated the rule against playing in a league outside North America after the regular season started. The rule prevents teams from raiding European leagues for good players as the playoffs begin.