The Scottish striker came to Hillsborough with a big reputation but only scored three goals last season and was eventually farmed out on loan to Huddersfield Town.
Graham signed from Wigan after moving to the JJB Stadium following a prolific spell at Torquay United - but he never recaptured the form at Hillsborough which he shown on the south coast.
Meanwhile, Paul Sturrock has apologised to fans after last night's drubbing at Mansfield Town and admits he should not have played his senior players who were still suffering from jet lag.
Sturrock told the club's official site: "Football managers sometimes make mistakes - five minutes into that game I knew I'd made the biggest blunder I've made since I've been here - maybe the biggest in my management career."
"I wouldn't say I apologised to the players but I made it plain I took responsibility for it."