The newspaper said Druckenmiller withdrew after he was informed by four of the five Rooney brothers that his offer for their shares, believed to be in the neighborhood of $550 million, would not be accepted.
At least three of the five brothers -- sons of team founder Art Rooney Sr. -- want to sell their equal shares partly to avoid costly future inheritance taxes for their children and grandchildren.
"Of course I'm disappointed," Druckenmiller told the newspaper in a statement. "But those are their shares and they have every right to seek a higher price for them."
Druckenmiller said he made it clear throughout the discussions that if the family could resolve its problems internally, he would step away.
It is believed that NFL Commissioner Roger Goodell strongly favors the family retaining control of the franchise.
"While we would have preferred our bid to have been accepted, we will continue our efforts to maintain the ownership of the Steelers in our family," Steelers president Art Rooney II said in a statement late Friday. "We have been told on many occasions the other family members prefer to keep the franchise in the family. We look forward to ongoing dialogue within the family toward that goal."