The Sportsman was launched in March as a rival to the Racing Post, the daily racing paper which had also developed a big sports betting section.
The circulation throughout the UK has struggled to get near its 40,000 a day target, with the audited ABC average for May being 16,315 and 12,762 (taking out bulk giveaways). The paper disagrees with the ABC figures and claims a daily sale of 23,500 last month.
The Sportsman's publisher, Sports Betting Media, appointed administrators Andrew Andronikou and Peter Kubik of UHY Hacker Young to oversee a rescue package.
The Sportsman's chairman, former Daily Telegraph chief executive, Jeremy Deedes commented: "Negotiations with interested parties continue to secure the long-term future of the paper. In the meantime, The Sportsman will continue to appear in the newsstands every day."
The Sportsman was backed initially by a high-profile consortium led by editor-in-chief Charlie Methven, which included Ben and Zac Goldsmith, Collins Stewart co-founder Andy Stewart, and Michael Spence, the chief executive of ICAP.
Armed with a reported start-up budget of between £11 million and £12 million, The Sportsman aimed to tap into the UK gambling boom, which has seen betting on mainstream sport and poker take off, and become Britain's first sports betting newspaper. It also tried to appeal to Racing Post readers by having a sizeable horseracing section.
The ambitious project encountered problems from the start, with the form and racecards, the paper's layout, and lack of an Internet site drawing criticism. Max Aitken and marketing director Mark Dixon left in May and the paper has struggled to build readership despite the best efforts of over 100 staff members.
The Sportsman is expected to shift its focus more toward racing in a bid to boost sales, since the long-established and profitable Racing Post sells around 75,000 copies daily.
The Sportsman's communications director Ed Pownall said: "I think it is likely that more often than not in future we will be leading with racing unless there's a big football (soccer) story."