Spanish publication Marca reported over the weekend that Chelsea were prepared to pay the 25-year-old’s €10 million (£8.3m) release clause and offer an irresistible salary to the player.
A Celta source revealed that there were clubs pursuing Iago, but that they would have to meet the buyout clause for the player to leave, according to Marca. The Daily Star has reported that Chelsea have already made an offer for the value of Iago’s clause.
Iago, who came through the youth ranks at Celta, has scored eight goals in 19 appearances this season.
Still, Chelsea’s top striking target is widely believed to be Radamel Falcao. It now looks certain that the prolific Colombian will remain with Atletico Madrid until the end of the season, although there is thought to be a host of clubs lining up for his signature ahead of the summer.
Last week the rumor mill went into over drive due to some fairly innocuous comments he made about playing in Italy and now the 26-year-old is being linked with Paris Saint-Germain after being asked about the nouveau-riche outfit by French television show Telefoot.
“France is a wonderful country," Falcao said. "I have been there before and I liked it very much.
"PSG has a very ambitious project and has invested a lot of money to build an important team. They are going to need some time but they could reach their objective very soon.
"It's not impossible that PSG and me see each other very soon.”
Few clubs in the world could afford the fee it will take to secure Falcao, with PSG certainly among them. Real Madrid and Manchester City have also been linked, although Chelsea are thought to be determined to land the man who has scored 18 goals in 17 league appearances this season.
According to the Sun, Chelsea are also prepared to splash out to bring Luka Modric to Stamford Bridge from Real Madrid. Modric only moved to the Spanish capital in a £33 million deal from Tottenham last summer, a year after Spurs rejected a £40 million bid from Chelsea.
Modric has struggled since his switch, starting less than half of Madrid’s league games and he was recently voted as the worst signing of the season in Spain by readers of Marca. Chelsea could take advantage of the situation with a move for the Croatia international in the summer, potentially as a replacement for Frank Lampard.
French publication L’Equipe reports that Chelsea could also move for Queens Park Rangers’ Stephan Mbia at the end of the season. The 26-year-old, who can play in the center of midfield as well as defense, only arrived at Loftus Road from Marseille last summer.
Yet it is believed that QPR boss Harry Redknapp is trying to bring in defensive midfielder Yann M’Vila, potentially making Mbia available.
Chelsea are currently light in the center of midfield with Oriol Romeu out injured for the rest of the season and John Mikel Obi currently on African Cup of Nations duty. A move for Mbia would be a significant surprise, however.