Sami Khedira’s much-rumored transfer to Arsenal could be back on, despite Real Madrid manager Carlo Ancelotti appearing to rule out his exit from the Bernabeu. Arsenal had trailed the German World-Cup-winning midfielder for much of the summer and were thought close to agreeing a deal before his reported wage demands of £150,000 a week saw the Gunners’ interest fade. However, reports in Spain now suggest that Khedira’s time at Madrid is about to come to an end.

According to Marca, a Madrid-based sports daily with close links to the European champions, negotiations to extend Khedira’s contract beyond next summer have broken down. He has also been told that his first-team opportunities will be limited this season, following the arrival of his compatriot Toni Kroos. Indeed, it is said that he could now be available for as little as €15 million (£12m). The 27-year-old’s future was again called into question when he was left out of the squad for Real Madrid’s UEFA Super Cup win over Sevilla last week. However, speaking this weekend, Ancelotti claimed, after ruling out any further signings, that Khedira, and Ángel di María, remain in his plans.

“Nothing has changed,” he said, reports Spanish daily AS. “They're Real Madrid players. I chose other players for the European Super Cup. Only Kroos played from among those who arrived on 5 August. Today it would be good for them to get some game time and improve their fitness.”

British tabloid the Daily Express has a very different take, reporting that Khedira’s agent has flown to London to size up interest from Arsenal and Chelsea. Arsenal’s Premier League rivals have also been linked to Khedira, as have Bayern Munich. The German champions were thought to be keen to wait until Khedira’s contract expires before snapping him up on a free transfer, although a recent injury to midfielder Javi Martinez could persuade them to make their move now. Madrid will clearly not want Khedira to run his contract down, especially as it is believed that they are attempting to raise funds for Monaco striker Radamel Falcao.

Arsenal manager Arsène Wenger recently stated that he still feels his squad is light in a couple of areas, and hinted that he could make further signings if the club negotiates its Champions League playoff with Besiktas to the revenue boon from qualifying for the group phase. But it could be a different midfielder that he targets. Sky Italia has reported that Arsenal have made an offer for Paris Saint-Germain’s Adrien Rabiot. The 19-year-old made his breakthrough into the PSG team last season, starting 12 matches in Ligue 1 and appearing in another 13 off the substitute’s bench. With the France Under-21 international having just a year left on his contract, he could be available for as little as £5.5 million. If Arsenal are unable to complete a deal, Juventus are thought to be ready to pounce.

Despite Wenger insisting that he is more than content with his forward options, Arsenal continue to be linked with strengthening that area of their squad. According to the Daily Star, Arsenal are one of the clubs to have been alerted by Ezequiel Lavezzi’s contract negotiations with Paris Saint-Germain breaking down. Given that Lavezzi operates primarily form a wide position, he seems an unlikely target for Arsenal, which has numerous options in those areas.

The same can be said about Arsenal’s reported interest in Chilean Eduardo Vargas. The Napoli forward was said to be on his way to Arsenal, however it is no surprise that the Independent is now stating that those reports are wide of the mark. Instead, Vargas looks a more realistic target for Sunderland and Queens Park Rangers.