Real are in the market for a striker as cover for Argentina's Gonzalo Higuain, who is out for four months after back surgery, and had wanted the 34-year-old Dutchman to return to the Spanish capital during the current transfer window.
However, Hamburg refused to let him go as he has a contract until the end of the season, feeling they need the striker to help them finish as high up in the league as possible.
"A contract extension with Hamburg can now be ruled out. This is not possible any more," the player's agent, Rodger Linse, told the Hamburger Morgenpost newspaper.
"He cannot understand it (why Hamburg did not let him go) and he has got a problem with it. It is very, very painful," Linse said.
"It is sad because Hamburg have no idea what they are doing to Ruud with this decision."
The former Dutch international joined Hamburg last January after netting 46 goals in 68 games over three-and-a-half seasons with Real and was eager to get a last chance on the big European stage before retiring.
Hamburg are currently sixth in the Bundesliga, 17 points behind leaders Borussia Dortmund, with Van Nistelrooy having scored six goals.
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