Big Day Out (BDO) founder Vivian Lees has accused AJ Maddah of running the festival into the ground to wipe out competition for his Soundwave event.

Last week co-owner AJ Maddah sold his stake in the festival, having only just bought his way into BDO last year.

The new sole owners of the BDO, US company C3 Presents, have confirmed the music festival will not be held next year although they intend to bring it back in the future.

In an exclusive interview with Hack on triple j, Maddah revealed he sold his share in the festival for $1 and has the option to buy back into the festival for $1.

"The Big Day Out obviously fell apart last year," he said.

"We always had to regroup, build a new time for it, I guess re-concept the festival to the point where it's a bit more modern and it a bit more appealing".

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Lees blames 'megalomaniac' Maddah for BDO failure

Lees says Maddah deliberately sabotaged the running of the festival to drum-up business for his heavy-rock centred Soundwave festival.

Maddah is the sole promoter of the Soundwave festival, which he founded in 2004.

"He is sitting there with the only event that's big and means anything to rock fans," he said.

Lees ran BDO since its inception in 1992 and brought some of the most notable headliners to the festival, including Nirvana in its inaugural year.

He sold his stake in the festival in 2012 after spending 20 years as its co-producer.

Lees says Maddah is a megalomaniac, whose "dysfunctional" relationship with C3 Presents doomed BDO to closure.

"That doesn't surprise me after the way it ran last year. It's pretty tragic that it won't be coming back this year," he said.

"All I can say is I wish him well but he should stick to what he's good at which is the Soundwave festival."

Lees says while it is surprising more people were not interested in BDO 2014 line-up, the closure of the festival will leave a gap the Australian music scene.

"All I can say is the Big Day Out has been and will always be the festival in Australia," he said.

"If people are expecting something better to come along tomorrow, it's not going to happen."

Maddah denies allegations of Soundwave cannibalising BDO

Maddah says Soundwave is in a secure financial position and says he had no incentive to sabotage the success of BDO.

"Soundwave was never looking doubtful, there's a lot of offers of investment," he said.

The Big Day Out has brought many major bands to Australia over two decades. ( Getty Images: Mark Metcalfe )

Maddah admitted selling his share of BDO would take any financial pressure off Soundwave to recoup his losses.

"The losses of Big Day Out were a lot bigger than I expected," he said.

"I didn't want to get into a situation where I had to bring investors in to Soundwave ... I didn't want to compromise on the quality of Soundwave, I didn't want to compromise on what we deliver."

He says despite having to bail out of the festival due to losses in 2014, there is a positive future for BDO.

"I believe the Big Day Out with the right line-up and presented properly with new concepts, and making things modern, will work out fine."

Maddah told Hack there was no truth to speciation the 2014 Soundwave festival had been compromised due the $5.5 million he lost in BDO.

"As I mentioned several times, we are not on an edge financially with Soundwave."