Madison Square Garden had a pretty icy response to Macklemore‘s claims that the arena turned down his “Free Palestine” tour … basically implying he’s not a big enough artist to headline the Garden!

An MSG Entertainment spokesperson tells TMZ … “We have some of the busiest venues in the world with extremely limited availability and he’s not an arena level act.”

Ouch!!!

Macklemore claimed Friday that nine major U.S. arenas — including MSG, the World’s Most Famous Arena — refused to host his “Free Palestine” tour after three sold-out shows in Europe.

The rapper claimed the venues turned him away after learning that the shows would be a benefit for Palestine.

The rapper also said the arenas were threatened by the words “Free Palestine” because they “challenge the systems of power they built their fortunes on.”

While MSG — and 8 other arenas — denied him, Macklemore said he and his fans had the option to “build our own stages” … so who knows which new venues might host his concerts in the U.S. down the line.

Before Macklemore tried to extend his “Free Palestine” tour in the U.S. … the shows sold out in Dublin, Paris and London, so the demand seems to be there!