With his contract expiring in the summer, Alexander-Arnold can enter negotiations with other clubs to arrange a free transfer. However, Liverpool have been hopeful of convincing him to sign an extension, with coach Arne Slot doing his best to encourage the right-back to stay, reports.
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The England international has been linked with a move to Madrid for a long time and the report adds that he appears guaranteed to join the Spanish giants in a move that would see him join Three Lions co-star Jude Bellingham at the Santiago Bernabeu.
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The loss of the 26-year-old will come as a big blow for Slot's side, who could also see fellow defender Virgil van Dijk and star forward Mohamed Salah leave when their contracts come to an end after this season.
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WHAT NEXT FOR ALEXANDER-ARNOLD?
With a move to La Liga seemingly imminent, Alexander-Arnold will soon depart the club he joined at the age of six years old.