Santana said the Brazil international did not agree to the new deal, which placed as a condition that Alves must play 60 percent of all matches.
"We didn't reach any agreement with Barcelona to extend the contract that is up on June 30," Santana said. "Dani is sad. The negotiations are over. Dani will see out his contract at Barcelona in the best possible manner."
Santana said Alves -- who has been heavily linked with Paris Saint-Germain -- has another offer on the table for three years with an option to renew plus a signing bonus.
"We have spoken with other candidates and they had an opinion that differed from that of this club's leadership," Santana said.
Alves, who turns 32 before the end of the season, has been at the Camp Nou for seven years after moving from Sevilla for a fee in the region of £23 million.
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