Reed has since signed a one-year deal with the Kansas City Chiefs. It includes $5 million guaranteed and up to $7 million in total, according to the NFL Network.
He was set to make nearly $9 million with the Seahawks in 2021.
Seattle wanted Reed to agree to what's known as a simple restructure that would have paid him the same amount and given the Seahawks immediate cap relief.
The proposed restructure would have reduced Reed's base salary to the veteran minimum of just under $1 million, but he would have received the rest of his compensation in the form of an $8 million signing bonus. Teams commonly use this type of conversion to free up cap space by deferring cap charges to later years.
Because Reed was entering the last year of his contract, the Seahawks would have added one or two "dummy years" to spread out the cap charges from his new signing bonus. But whatever number of artificial years were added to the deal would have automatically voided after this coming season, meaning Reed would still have been a free agent as scheduled.
Reed's agent was in favor of the restructure, according to a source. But Reed was insistent on getting an actual extension from the Seahawks, believing he had earned one after becoming a prominent piece of their defense. When the Seahawks declined, Reed asked if they would promise him a new deal down the road, which they did not.
The Seahawks released Reed after they were unable to trade him. That move saved Seattle nearly $9 million in cash and cap space while leaving behind $5 million in dead money. They needed those savings to re-sign defensive end Carlos Dunlap. Seattle also brought back defensive tackle Al Woods as an option to replace Reed on early downs.
Refusing the restructure meant Reed hit the market well into the second week of free agency, by which point teams have generally done most of their offseason spending.
Reed, 28, has been a full-time starter since 2017, the year after Seattle chose him in the second round out of Alabama. He was known primarily as a run-stuffer his first two seasons, but then broke out for 10.5 sacks in 2018. He began the 2019 season by serving a six-game suspension for violating the NFL's personal-conduct policy and finished the year with two sacks in 10 games.
The Seahawks gave Reed the two-year, $23 million deal last March, betting that he could recapture his 2018 form. He had something of a bounce-back season with 6.5 sacks in 16 games but was set to count nearly $14 million against the cap, a number that the Seahawks wanted to lower with the restructure.
In Kansas City, Reed will reunite with former Seahawks teammate Frank Clark. Reed set a career-high with 10.5 sacks in 2018, the last season he and Clark played together on Seattle's defensive line.
NFL Network first reported Reed's refusal to restructure his contract.