"We looked at where we needed to strengthen and what players we had available," Linfield boss David Jeffrey told the club website.
"We felt in the left back area we could potentially have four left backs with Pat, Tim, Aidan O'Kane and young Jonathan Harkness who has just signed for us.
"We needed to strengthen elsewhere so really at the end of the day, that's what it came down to.
"We would have loved to have kept the players but it isn't just possible to do that. It wasn't about their ability, it wasn't about their talent, it was a simple matter of logistics."
Ferguson has been granted a testimonial season "in recognition of his quite outstanding and lengthy service in Linfield's cause".
Jeffrey and the club's Team Committee will meet other players for contract talks next week.