According to the Express, Arsenal and Liverpool are scrapping for funds after Real Madrid made it apparent to fans in the Football Transfer Tavern that Isco will be available for £64m.
Despite the fee being extortionate, it is believed that both Premier League clubs can afford the price tag set for the versatile midfielder.
The Spanish youngster attracted attention from around Europe after he put in superb displays after he stepped in for the injured Gareth Bale, earlier on this season.
And after impressing in both La Liga and the Champions League, it is thought that Carlo Ancelotti is reluctant to let him go, but the manager has been told he must make extra funds in order to land his transfer targets.
The Madrid boss currently has his eyes set on Bayern Munich’s David Alaba and Cruzeiro’s Lucas Romero, as he looks to make Los Blancos the first team ever to retain their Champions League title.
It is reported that French giants, Paris-Saint Germain, are also in contention to sign him, and their financial strength could be added to if they offload Yohan Cabaye in January.