"He (Brian) has been a gentleman to deal with in our discussions and has been very understanding of my wish to implement a new structure," Cellino said in a statement on the club's official website (www.leedunited.com).
McDermott added: "...it is clear Massimo wishes to implement a new structure and feels he will work more successfully for Leeds with a coach rather than a manager.
"I respect that Massimo must be fully supported in putting together his vision for the club so he can bring us the success we all want."
British media reported in January that McDermott had been sacked but he was told the following day he would remain as manager. Leeds struggled to a 15th-place finish in the Championship last season.
"Brian is a great manager and a great guy. He has been unfortunate to work in such difficult circumstances," added Cellino.
"I did not fully understand the mess he had to work in, and the broken promises he had to deal with, until I have got involved trying to turn Leeds around."
(Reporting by Tom Hayward; editing by Ken Ferris)
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