Rodgers revealed: "Financially it was obviously something we needed to look at, that's our reasoning behind it.
"Pepe has been a lynchpin over the last few years. But the team is evolving and no-one is bigger than the club.
"It is my decision. I did it last season when we had to do things with regard to financial stability and that is something I have obviously had to do again this time.
"I had a good chat with Pepe and he understands what I want to do. And losing another big voice from the dressing room isn't a concern.
"We have Kolo Toure, who is loud, others will step up to the mark, and we will get others on top of that who will come in and be hungry - so no, that isn't a worry."