Emirates club pull out of deal leaving White hart Lane as likely destination.
Arsenal have pulled out of a deal to sign Dinamo Zagreb midfielder Mateo Kovacic, leaving Tottenham Hotspur free to sign him.
The 17-year-old has been labelled the next Luka Modric and has been on the Gunners radar since he was 13.
The Croatia U17 international had the opportunity to join a string of Italian and German clubs but chose a move to Zagreb to stay close to his family.
Arsenal chief scout Steve Rowley has watched Kovacic a number of times and enquired about his availability.
But Gunners boss Arsene Wenger has baulked at the £10million asking price leaving Tottenham next in-line to snap the playmaker up.
Rowley watch Kovacic’s debut against Hrvatski Dragovoljac last season, and the midfielder went onto make eight appearances and score two goals as Dinamo won the league.
Dinamo’s sporting director Zoran Mamic told the Croatian media this week he had held talks with Arsenal, but discussions had hit a deadlock over the transfer fee.
“A few days ago I talked with some of my friends from Arsenal,” Mamic said.
“I told them Mateo Kovacic is in good form, that he is playing well. They say that Arsenal can’t join this ‘dance of millions’ for him.”