The Spain international swapped Malaga for Real Madrid last summer in a £24m move with Premier League clubs reportedly interested. Manchester City were the favourites at the time, but it seems like Liverpool and Arsenal are the principal contenders now.
Isco, a wonderfully gifted player, has found it difficult to hold down a regular starting place at the Bernabeu, such is the quality and strength in depth at the club.
Competition for places
The addition of James Rodriguez over the summer was not good news for the Spaniard despite the departure of Angel Di Maria. The formation that Carlo Ancelotti plays does not call for a number 10, Isco's preferred position.
Rodriguez will now jump ahead of Isco in the pecking order anyway, so the 22-year-old may have to leave the club for first-team football.
The Daily Express report speculates that Liverpool and Arsenal are preparing January offers for the talented midfielder, should he become available at the right price.
With Real Madrid pursuing a Galactico policy again, Isco could be on the market. The Spanish giants have not shied away from selling their top stars if they're able to sign replacements capable of selling more shirts. That allowed Di Maria to join United and Xabi Alonso to Bayern Munich as Ancelotti brought in Rodriguez and Toni Kroos.
The other option for Liverpool and Arsenal is Barcelona winger Pedro. The Spain international is reportedly available as Luis Enrique is keen to promote new Spain call-up Munir El-Haddadi.
Arsenal transfer news
The addition of Luis Suarez has also edged out Pedro, although he may prefer a move to Serie A with Juventus keen.
That may leave a move to the Premier League as the best bet for Isco, with Liverpool and Arsenal both eager to strengthen as they look to juggle Champions League and Premier League commitments.