Varndell has had a frustrating season at Welford Road
Leicester Tigers acting head coach Richard Cockerill says finances played a big part in allowing wing Tom Varndell to join Wasps for next season.
"It's shame that Tom has had to move on but we have to make some tough decisions in the current marketplace," Cockerill told BBC Radio Leicester.
"He wanted to go for more opportunities and maybe we have had to make room from a financial point of view.
"There's simply not enough room at the table to keep everybody in the squad."
England international Varndell, 23, made his Tigers debut in 2004 and scored 64 tries in 111 games for the club.
This is a very amicable split in lots of way but you have to make tough decisions
But he has not been a regular this season and will join Wasps on a two-year deal at the start of next season.
"It's disappointing because Tom's a great bloke and has done lots of fantastic things for us and we wish him all the best," Cockerill said.
"His attitude has been first class and this is a very amicable split in lots of way but you have to make tough decisions and this is one we've had to make."