Mike Florio of ProFootballTalk.com reports the deal was actually in place, but Harbaugh decided not to leave San Francisco. He has coached the 49ers to the NFC Championship Game three years in a row, and to the Super Bowl once.
"The team conducted an extensive coaching search, and explored several options," the Browns said in a statement Friday. "That search produced an outstanding head coach in Mike Pettine and we're excited about his future with the club."
According to Cam Inman of mercurynews.com, Harbaugh has two years left of the $25 million, five-year contract he signed when he left Stanford in January 2011. Last December, 49ers CEO Jed York said he'd like to extend Harbaugh's contract, and negotiations were expected to happen during this offseason.
Niners CEO Jed York appeared to deny the report, tweeting, "@ProFootballTalk @RapSheet is this on the record? Report isn't true."
According to ESPN.com, a different 49ers source told the NFL Network that the report was "ridiculous" and "completely false."
It would not have been the first time a coach was traded. In 2002, Jon Gruden was traded from the Oakland Raiders to the Tampa Bay Buccaneers for two first-round picks, two second-round picks, and $8 million.