7:00pm: The Grizzlies have confirmed in a press release that Hollins won't receive a new contract and that the team will begin searching for a new head coach.
"After a thorough internal process, which included conversations with Lionel and his representatives, we decided as an organization to move in a different direction," said CEO Jason Levien in a statement.
5:38pm: Lionel Hollins is out as the Grizzlies' head coach, according to Ronald Tillery of the Memphis Commercial Appeal, who reports (via Twitter) that the team won't extend Hollins' contract.
With Hollins' contract set to expire at the end of June and an oft-mentioned "difference in philosophies" between the head coach and Memphis' new management, the team was expected to make a change this offseason. However, Hollins has repeatedly expressed a desire to return to the Grizzlies, and the two sides had been discussing the possibility of a new contract.
With Hollins now officially on the market, he becomes a more viable potential candidate for other teams searching for a head coach, such as the Clippers, Nets, and Nuggets. As for the Grizzlies, they reportedly have interest in former Nuggets coach George Karl, and could also promote assistant Dave Joerger to the head coaching role.