Angry Hamburg abruptly ended their bid to sign Stevens and cut off negotiations when it became clear that the Dutchman was also talking with Schalke, the club he had led to the 1997 UEFA Cup title.
Stevens, who also had a brief stint at Hamburg and saved them from the drop in 2008, was supposed to be the fireman again with Hamburg lying in bottom place on four points from seven games.
Instead it will be interim coach Rodolfo Cardoso again sitting on the Hamburg bench after steering them to their first league win of the season last week.
Sports Director Frank Arnesen, who joined form Chelsea with the mandate of turning around the former European champions, had to deal with the Stevens fiasco, the latest embarrassment for the only Bundesliga team to have never played in the second division since the introduction of the top flight.
"I want a coach who will be 100 percent in favour of working here, that is the feeling I want to have," Arnesen told the club website.
"After talks with Stevens I decided it would not be. As to the reasons behind my decision and the details, I would not like to say anything."
Stevens himself was surprised by Hamburg's decision but hours later signed with Schalke.
"These were hectic days. First this story with Hamburg and then Schalke appeared. Obviously you think about it and I think it is legitimate to hold talks. Hamburg were not only talking to one coach either," he told reporters.
On Saturday, League leaders Bayern Munich, who have won 10 straight games in all competitions, including six in the league, without conceding a single goal, will travel to Hoffenheim, who have moved up to fourth in the league on 12 points under new coach Holger Stanislawski.
Bayern are top on 18, two ahead of Werder Bremen and Borussia Monchengladbach who play Hanover 96 and Freiburg respectively.
Champions Borussia Dortmund, who were crushed 3-0 by Olympique Marseille in the Champions League on Wednesday, should have an easier task at home against promoted Augsburg, who are still looking for their first win of the season.
