Real Madrid look set to pip Manchester City to the signing of the highly rated play-maker.
Spanish giants Real Madrid have entered into talks with Manchester City target Isco according to the Daily Mirror.
City were hoping to add the highly rated Spanish midfielder to their squad this season but the player and his father have already held talks with Real Madrid about a move to the Spanish capital.
Isco is thought to be top of new manager Manuel Pellegrini’s wish list for signings this summer but he could miss out on a player who he has formed a bond with while coaching him at Malaga.
City hoped that by making Pellegrini their manager, Isco would be more likely to move to the Etihad but the lure of Real Madrid could prove to much for the young Spaniard.
Isco is thought to be worth £20 million but Malaga could accept a bid of £15 million due to their financial difficulties.
Isco may not be the only player who City miss out on because of interest from Real Madrid.
The club are interested in Napoli striker Edison Cavani and City see him as their top target for the summer but Real Madrid are also interested and have already talked to the players representatives.