The midfielder, who won the Young Player of the Tournament award as Argentina lifted the World Cup in Qatar, has a €120m (£106m) release clause, though Benfica were previously adamant that they would not accept anything below this valuation in January.
However, Romano has revealed on his YouTube channel that the clubs are no longer in contact as the deal has broken down, with Chelsea attempting to negotiate a lower fee for Fernandez.
He said: “As of now, Chelsea and Benfica are no longer speaking and there is no new meeting scheduled between the two clubs.
“Last week, Chelsea had an agreement with the Benfica player, Enzo Fernandez, they had an agreement on the contract, a long-term contract for Enzo, everything in place on the player’s side – but not on the club’s side.
“In the last 7-8 days, Chelsea accepted to negotiate with Benfica around that value [of the release clause]. So this is why the two clubs were in direct contact and this is why the deal was verbally advanced between Chelsea and Benfica.
“They never triggered the clause and they never submitted an official proposal for €120m – they always discussed verbally of negotiating around the value of the clause with different payment terms.”
Given what Romano has revealed, the deal broke down simply because Chelsea were unwilling to pay the huge fee upfront, despite offering a large fee broken down into instalments.
Paying the release clause would have seen Fernandez become a British record signing, and this is a 21-year-old midfielder with half a season of experience at Benfica.
Whilst his supreme talent was on display at the World Cup, it is hard to justify such a large fee for an unproven player, and there are alternative options Chelsea could target now or in the summer.
A long-standing interest in Declan Rice could be explored, and he would arrive as a much more proven option, for potentially a lower fee.
It remains to be seen whether Fernandez will be on the move in January but it seems unlikely that anyone would spend the required funds in the middle of the season.