Liverpool were also interested in signing Isco.
Arsenal and Liverpool have had their hopes of signing Spanish starlet Isco dashed by Real Madrid manager Carlo Ancelotti, the Daily Star reports.
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Both Premier League clubs were interested in signing the playmaker, who joined Los Blancos in a big money move from Malaga last summer.
The youngster could struggle for game time this season following the arrival of James Rodriguez, who looks set to battle Isco for a place in the Real starting line-up.
The Gunners and the Reds were hoping that meant that the 22 year old would become available for a transfer and were reportedly preparing big money bids to lure the youngster to the Premier League.
Unfortunately, Ancelotti appears to have ended both clubs hopes of signing Isco by promising to give the Spaniard more game time.
The former Chelsea and AC Milan boss said: “He had a great season last year & we have a lot of faith in him. He is the future of this squad.
“Isco & Illarra have a lot of personality and respect my decisions. They are always ready to play.”
Manchester City were also reportedly in the running for the playmaker, having rivaled Real for his signature last summer.
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