It was revealed prior to the World Cup finals at the start of June that Chelsea were looking to discuss a deal for the talented 21-year-old.
Pachuca were prepared to enter into talks, but made it clear from the off that they would have the best interests of the player at heart.
They are aware that Damm will move on at some stage, with the youngster having previously taken in a two-week trial at Manchester United.
The fact that he holds Mexican-German dual nationality also makes him appealing to Premier League clubs as he would not require a work permit.
Pachuca are, however, reluctant to part with Damm before he is ready to make a step up and have informed Chelsea that they will not be sanctioning a switch to Stamford Bridge at this stage.
Vice-president Andres Fassi told Record: "I believe that Jurgen has to achieve some important goals in Mexican football.
"He has to establish himself first, seek the possibility of being in the national team and then, as he is young, there will be opportunities to leave when the time is right.
"He still has much to do at Pachuca. He needs to meet certain objectives.
"We thought that (when Chelsea made the offer) it was not the right moment for him to leave."