Sky Sports, as quoted by Metro, is reporting that the Premier League champions are no longer looking at a potential deal to sign Kovavic in the current transfer window.
The same article states that Manchester United are interested in a potential swoop to sign the World Cup star ahead of the new Premier League season.
According to the same story, Kovacic is eager to leave Real Madrid after the Croatian midfielder struggled to hold down a regular starting spot.
Sky Sports goes on to claim that Real Madrid can name their price for Kovacic given the Croatian star has three years left to run on his current deal.
Manchester United finished in second place in the Premier League table to ensure their continued participation in the Champions League.
The Red Devils have already signed Brazil international Fred in a £52m deal from Ukrainian Premier League champions Shakhtar Donetsk.
Manchester United have also added Portuguese full-back Diogo Dalot in a £17m switch from FC Porto earlier in the summer transfer window.
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