Mateo Kovacic's transfer fee has been agreed upon by Manchester City and Chelsea.
The Croatian international will cost City £25 million ($32 million) up front, with an additional £5 million ($6 million) required in add-ons.
According to sources who spoke to ESPN, Chelsea had originally hoped to achieve an agreement on a transaction worth closer to £35 million ($44 million), but they had to lower their demands to do so before June 30. Prior expenditures will be included in the first full tax year and aid Chelsea in adhering to UEFA's Financial Fair Play regulations.
Before joining Pep Guardiola's team for City's preseason tour of Japan and South Korea, which starts at the end of July, Kovacic will have a physical.
In order to strengthen their midfield after failing to secure a deal for Jude Bellingham, who has since left Borussia Dortmund for Real Madrid, City has moved rapidly to sign Kovacic.
Despite interest from Barcelona and Arsenal, Guardiola and director of football Txiki Begiristain are still trying to persuade Ilkay Gundogan to stay. Bernardo Silva's future at the Etihad is also in doubt.
On June 30, Gundogan will formally become a free agent, and City and Barca have both made contract offers to him.
Silva has a contract that runs until 2025, but after six years in England, he is eager for a fresh challenge. He has interest from Barcelona and Paris Saint-Germain, according to sources speaking to ESPN, but City will expect a big amount before letting him go.
Sources claim that City is also interested in Declan Rice of West Ham but has not yet submitted an offer. The English midfielder has already had two proposals from Arsenal rejected.
According to sources who spoke to ESPN, West Ham is eager to investigate a Rice-for-City exchange in which Kalvin Phillips would relocate to the London Stadium.
Phillips' first season at the Etihad was difficult for him in terms of possibilities, but he has stated that he want to stay and compete for a spot. Former Leeds United manager David Moyes attempted to sign Phillips in the past.
