Garay has just released an emotional video on Instagram (here, in Spanish) in which he explains his side of his contract renewal situation.
He claims that the assertion that he refused a decent sized salary is false, with the only offer made during the Marcelino time and substantially less than what he currently receives. He says that he has always wanted to renew with the exception being for a short period of a few weeks after Marcelino's sacking when he wanted to see how things would develop.
He says that since his injury, the club has made no new offers, apart from suggesting that if he took a bigger salary cut than the rest of the squad this would help his case.
He looks very stressed, really annoyed and at one point, on the verge of tears, saying that he's sick of being misrepresented on this issue.
Despite all that, clubs generally look really unfavourably on such uses of social media, so I would say that this had definitely sealed his fate and he has kicked his last ball in a Valencia shirt.
The question now is who replaces him. The club's defensive planning has been poor for some time. Given his vulnerability to injuries, having 4 defenders has clearly not been enough and there have been various times during the last few seasons when other players have had to plug the gap, Coquelin most notably. The signing of the even more injury prone Mangala just made things worse and this is clearly one of several areas where the club needs to invest in. They also need to blood a fifth defender (Javi Jimenez?) who can step in when needed.