By not exercising his fourth year option Spurs have trasformed Mahinmi from a player developing for the team in a hidden diamond (in case they know the value and they won't play him...horrible decision for this year in case he shows signs he can help the team) or immediate trade value (expiring contract/young big).
Imho, like Bruno pointed out, if they think the guy has value for the team, not extending has been a wrong choice and and risk to put the Spurs in lose/lose situation...
If they don't play him thinking he has value, is just for giving him a contract a la Blair...but others team can bite as well (and we have to spend a big part if not all the mle on Splitter).
Not exercising the option, imho, does make sense only if they already decided that, in any case, the guy is not in the team future...and that would be a fail, considering Spurs spent a first choice for him and they developed him (at least in in nbdl) for years...
I, frankly, didn't understand the choice to not exercise the option...it was a risk worth to take, just considering he's more experienced in team's scheme's than Ratliff, Mc Dyess and Blair (and, probably, more athletic than all the trio) and that he never had a real chance to prove himself and that , in the worst case, he could have been used next year in trades, given the fact that next year would have been his last....