According to Birkett, Prater received a $750,000 bonus instead of a base salary for the 2016 season and his 2017 contract is non-guaranteed.
The Lions struggled with kicking issues before they were able to add Prater a few years ago after the Broncos elected to move on from him.
Prater, 31, spent seven years with the Broncos before signing a three-year, $9 million contract that included a $750,000 signing bonus and annual $50,000 workout bonuses with the Lions in 2015.
Prater was set to make a base salary of $2.25 million for the 2016 season.
In 2015, Prater appeared in all 16 games for the Lions and converted 22 of 24 field goal attempts (91.7 percent) to go along with 36 of 39 extra point tries.