A consortium lined up to develop open space have threatened to sue Harrow Council for compensation if the land is used to build a school instead.
Whitchurch Consortium was selected by the authority in November 2011 as the preferred bidder to revamp Whitchurch Playing Fields in Wemborough Road, Stanmore.
But a month-and-a-half ago it was announced the site is subject to a feasibility study to test the appropriateness of constructing new permanent premises for Avanti House School, which is currently temporarily occupying the former Peterborough and St Margaret's School, in Common Road, Stanmore.
Arvin Mahen, operations manager of the Whitchurch Consortium, said after meeting council leader Councillor Susan Hall: "We let them know that we have put a lot of our time and money into this.
"We will just have to meet with the council when the study is finished, and if our project does not go ahead then we let them know that we would be seeking compensation.
"We would be very disappointed, not just for us but obviously there is the boxing club, football and cricket teams who need the facilities."
The consortium proposes to build a privately-run community sports complex on the land, with many local sports groups backing their bid, although other clubs and teams supported a rival bid from The Harrow Rugby Club Consortium.
The Whitchurch Consortium - comprising East London community club and sports academy Blake Hall Club, housebuilder Runwood Homes and West London estate agents Cavendish Rowe - had held off submitting a planning application until the outcome of an ultimately failed application to register the fields as a village green was known in December last year.
Further recent developments have complicated the plot.
It has been confirmed the open space is subject of a 1926 covenant that states 'no buildings other than buildings for or in connection with the use of the land as sports grounds' should be sanctioned.
Meanwhile the Department for Education classifies the land as school playing fields and a spokesman previously told the Observer: "We will only agree to the sale of school playing fields if the sports and curriculum needs of schools and their neighbouring schools can continue to be met."
Harrow Council have told the consortium that should the school not go through, they will be backed fully.
Independent Labour group leader Councillor Thaya Idaikkadar, who was a member of the Labour group and portfolio holder for property and major contracts in 2009 when the land was put out to tender, said: "It's a mess.
"I think somebody in the council should have done more research at the time.
"I understand the feasibility study for the school will be finished by March 31, so then we will know where we are going.
"I believe the Whitchurch Consortium are the best option.
"If the school came there, you would have three schools right together which would be chaos in terms of the traffic."
Mr Mahen said: "They said that it is classified as education land. They clearly did not investigate the grounds properly when they put it out for tender."
Harrow Council refused to comment.
