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Published 07:13 29 Aug 2018 BST
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If there continues to be a standoff in contract talks, Sterling would be allowed to reach a pre-contract agreement with an overseas club in January 2020 and leave City on a free the following summer.
Real Madrid, long-term admirers of the 23-year-old, are thought to be monitoring the situation carefully and have already added Sterling's name to their transfer wish list for next summer.
Although the report stresses that no bid is imminent from the European champions this year, they may target Sterling next summer. Should they decide to table a decent offer for him, City might be tempted to accept it if they know it's unlikely he will sign a new deal in Manchester.
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