Goal can confirm that AC Milan are in talks to sign Brahim Diaz on a permanent deal, with Real Madrid setting a €30 million (£26m/$37m) asking price for the midfielder.
It appears unlikely that Milan will be able to secure the 21-year-old on a deal that would cut all ties with Madrid.
It's more likely that Diaz would join Milan on another loan, or Madrid would sell the Spaniard to Milan but include a buy-back clause.
Diaz's record for Milan
Diaz joined Real from Manchester City for €17m (£15m/$21m) in January 2019, bringing to an end his three-year stay at the Etihad Stadium.
The midfielder found regular playing time hard to come by in Zinedine Zidane's ranks thereafter, and despite picking up a La Liga winners' medal in his first full season at the club, the Blancos decided to send him off to Milan for the duration of the 2020-21 campaign.
Diaz impressed during his loan spell at San Siro, contributing seven goals and four assists to the Rossoneri's cause in 39 appearances across all competitions.
The 21-year-old shone as Stefano Pioli's side enjoyed a run to the Europa League last 16, and also played a key role in helping them secure a second-place finish in Serie A.
Where will Diaz play in 2021-22?
Diaz will return to Real when his loan deal at Milan expires at the end of the month, and he still has four years left to run on his contract at Santiago Bernabeu - where Carlo Ancelotti has just replaced Zidane as the new head coach.
The Italian giants are now attempting to sign the Spain Under-21 international outright, but the Blancos still have faith that he can become a key player for the club in the future.
Goal has learned that Real will only sanction Diaz's departure if their €30m valuation is met and a buy-back clause is included that allows them to bring him back to the Bernabeu for a similar price.
The 13-time European champions are also open to extending the former City starlet's loan stay at San Siro, but it remains to be seen whether a compromise can be reached with the Rossoneri.
Ancelotti's influence
Ancelotti has a number of pressing issues to attend to as he begins his second spell in charge of Real, but Goal has learned that he will also make time to sit down with Diaz to discuss his future.
The Italian wants to get to know the Spaniard better before deciding whether his talents could be utilised at the Bernabeu next season, but competition for places in midfield is likely to be fierce as the Blancos seek to bounce back from their trophy-less 2020-21 season.