Peter Houston will leave his post as manager of Dundee United at the end of the season.
The 54-year old has been unable to agree a new deal with Arabs officials and will depart Tannadice when the current campaign finishes.
"In an ideal world, we would have had no hesitation in renewing contracts on a similar basis as originally provided," said chairman Stephen Thompson.
"However, the world has changed in the last three years and we must re-align the cost base of the business to the new economic reality.
"Peter fully understood this, but felt that with the direction the club has to go in, he could no longer continue to take the club forward.
"He will remain fully committed to his role as manager until the end of the season and will then leave with our best wishes and grateful thanks."
Houston was targeted by Blackpool earlier this week but he has revealed there was no official contact.
"I'm the innocent party here as far as Blackpool are concerned," said Houston.
"The chairman said Mr (Karl) Oyston had contacted him and asked for permission to speak to me. My agent John Colquhoun said the same thing.
"At no time in my career as a manager at Dundee United have I applied for any jobs. John never put me in for the Blackpool job or phoned Karl Oyston.
"I was told by the chairman and my agent that permission had been granted for the Blackpool thing. Fine - you show respect and I would have been happy to listen but I never got the phone call. I never got a reason for that."
