Hills to leave Bloomfield Road
By Simon Fudge
Last Updated: 01/01/70 1:00am
The 24-year-old has been with his hometown club since moving from Everton in February 1998.
The news of his refusal to accept the club's terms for an extension will come as a surprise to supporters of The Seasiders but McMahon told the club's official website that the club could not have offered him more money.
"I spoke to Hillsy late last week. Hillsy will be leaving the club in the summer and it is definite there is no negotiating now, he has made his bed and he has got to lie in it," said McMahon.
"His contract is up, we can't do anymore than what we can. We have offered him a wage rise, he's not accepting it.
"If he thinks he can find better, so be it. But if he doesn't get what he wants from other clubs he certainly won't be coming back to this football club because the contract won't be on the table again, it will be negotiated downwards in the summer.
"The top and bottom of it is he has refused his contract and he won't be here in the summer."
Despite Hills' decision to leave the club, McMahon confirmed that he is still in negotiations with Danny Coid, Richie Wellens and Martin Bullock over possible contract extensions.