Chelsea have not cooled their interest in AC Milan winger Rafael Leao and they will consider bidding as much as €120m (£106m) for the Portuguese international, according to reports in Italy.

The Blues did make an enquiry for the 23-year-old before the summer transfer window closed and it is expected that another approach will be made in the New Year.

Leao’s contract situation is the main reason why Graham Potter’s side are optimistic that they can secure the forward’s signature. While differences in wage demands are believed to be bridgeable, there is disagreement over another matter.

Sporting Lisbon are owed €19m in compensation by Leao due to a legal case. He is personally liable to pay it but he has requested that Milan cover the amount. The Serie A side’s new owner Gerry Cardinale is not willing to sanction the payment as Milan were not involved in the dispute with Sporting.

The resulting impasse means Leao is unlikely to sign a new contract with the Rossoneri for the time being and, with his current deal set to expire in 2024, his value in the transfer market will continue to drop, putting pressure on the club to sell.