The Spanish playmaker is widely thought of as one of the very best young players in European football, but it is rumoured that Los Blancos are considering letting him go at the end of his debut season at the club.
Isco only joined Real from Malaga last year, yet despite making a series of impressive early displays he has dropped down the pecking order due to the resurgent form of Luka Modric and the presence of Gareth Bale – the world’s most expensive player.
This is said to have left the 21-year-old frustrated, with speculation suggesting that he is already keen to leave.
Arsenal have been alerted by this, and are understood to be working on a £30m deal.
Manchester City are also keen, but after snubbing them last summer it remains unclear as to whether or not Isco is open to joining the Sky Blues.
Arsene Wenger already has a wealth of attack-minded midfielders at his disposal, yet he is known to be ready to add to his ranks after January’s pursuit of Julian Draxler.