Melbourne Victory aren't sure whether other A-League clubs can afford to sign high-profile players to rival Melbourne City's acquisition of Tim Cahill.
Football Federation Australia knocked back Victory as the A-League heavyweights sought to use the same 'guest player' pot of funding on Italian international Alessandro Diamanti.
Diamanti, 33, represented Italy at Euro 2012, scoring the winning penalty to knock out England, but was deemed not high-profile enough to access FFA funding.
"We were willing to progress conversations and we got to that stage with the player," Muscat said on Tuesday.
"It's very disappointing because he's a very talented footballer.
"His next club will be in a major league, so that tells you that he's still at his peak in terms of his football ability."
Muscat said he didn't believe another club in Australia would be able to access the guest-player pot if they needed to pay weekly wages upward of $75,000.
"For someone to fit the criteria as we're reading, it's going to cost between $4-6 million and probably even more," he said.
"Do clubs in Australia have that sort of capacity to spend? I don't think so."
Even though Cahill has signed for Victory's cross-town rivals, Muscat is able to see the benefits the Socceroo forward can bring to the competition.
"I've always said he's still got a lot to offer in terms of football," Muscat said.
"I want to see good players in the league. I prefer them to be at our club, but I want to see good players in the competition."
Victory have brought in Socceroo forward James Troisi under the salary cap in their biggest transfer of the off-season.
Muscat said he would continue his search to add to the squad, but only for the right player.
Victory have been linked with a move for New Zealand international Marco Rojas, who has been released from his contract with German club Stuttgart.
The 24-year-old won the Johnny Warren Medal as the league's best player in 2013 when last in Victory colours.
Victory face Hume City in the FFA Cup on Wednesday night in a replay of the 2015 semi-final and a homecoming for Jai Ingham, who signed for Victory after playing them last year.
Troisi has been cleared to play, while Carl Valeri is likely to miss after having his tonsils removed.