Farhad Moshiri has been trying for weeks to sign the Portuguese coach, who is under contract at Vicarage Road until June 2019, but Watford have resolutely insisted Silva is going nowhere this season and now Everton have accepted this as reality. They will have to look elsewhere for a replacement for Ronald Koeman.
Everton made their first approach on 13 November and made clear to Watford that they would be willing to pay at least £10m in compensation for Silva, who has no release clause in his contract.
However, Watford were always adamant that they would not lose their highly-rated coach halfway through the season, and that they had no reason to even negotiate with Everton. When Everton indicated later last week they could offer even more than £10m in compensation, Watford's response was the same.
Last weekend Watford chairman and chief executive Scott Duxbury made clear in the strongest possible terms to Everton that they would not be releasing Silva under any circumstances, and their anger at Everton's pursuit of their manager, a message that has been taken on board.
The view at Goodison Park is that unless Silva resigns, there is nothing more they can do.
Silva was interested in the offer from Everton, which would have been a substantial pay-rise with money to spend in the transfer market. But he did not want to leave without Watford's blessing and did not want to resign.
Now Silva accepts there is no chance of him leaving at this stage of the season, but the picture will likely be different next summer.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies