Mourinho and the former coach have been on bad terms throughout this year’s campaign and Mourinho’s remaining at the club had been questioned before the shakeup, under which Real’s organisation will take inspiration from English clubs.
"The experience of the season just ended has shown the need for new organisation at the club, giving autonomy to our coach," said club president Florentino Perez.
"I will not hide how painful the departure of Jorge Valdano is. We have come a long way together. But my feelings cannot be a reason for not fulfilling what I believe is my obligation. Jorge, I appreciate all your hard work and dedication.”
"Mourinho did not make any demands,” he added. “He asked for more autonomy in line with how English clubs are organised."
Valdano spoke of his affection for the club before admitting his respect for Mourinho. “I believe Jose Mourinho staying on is good for a club that’s been unstable in the past,” he explained. “It needs to settle for a reasonable period of time.
“He’s done a good job, I believe he is a good coach and I find it normal that he stays on.”
The announcement follows speculation that Mourinho might return to former club Chelsea to take the place of recently-fired Carlo Ancelotti.