Ancelotti confirmed the young Spaniard's desire for more regular first-team action, as reported by AS (via talkSPORT): "The footballer wants to find an opportunity to play more minutes and the club agrees with this."
He only started three times in La Liga last season for Real, scoring eight times in a total of 23 appearances, per WhoScored.com.
Reports from Italian paper Tuttosport (via 101 Great Goals) suggest the 21-year-old forward may be on his way to Serie A champions Juventus, but Arsenal have also been linked with the player.
However, Real president Florentino Perez seemed to rule out Morata moving to Juventus when talking to radio station Cadena Ser last week, per Paul Collins of the Daily Mail: "I am friends with the Juventus executives and president Andrea Agnelli. But I have not spoken to them regarding Morata and, honestly, the possibilities that he goes to play in Turin are zero."
But Tuttosport's report suggests Juventus lead the way for the youngster's signature, as they are offering him €10.5 million (£8.5 million) over a five-year contract.
Arsenal struggled up front for goals last season, with only Olivier Giroud scoring more than 10 in the Premier League during the 2013-14 campaign.
Morata would be an ideal signing for the Gunners and would likely be relatively cheap considering he has only one year left on his contract. However, it seems there is a fight on for the forward's signature.
Napoli Rubbish Insigne Link
Recent reports suggested that Arsene Wenger was preparing to bid £17 million for Napoli's Lorenzo Insigne if he performed well for Italy at the World Cup in Brazil this summer, per the Metro.
The player's agent, Antonio Ottaiano, said that the interest from Arsenal was flattering but the 23-year-old winger would likely stay in Naples, per talkSPORT:
We are honoured that a club like Arsenal could have Lorenzo on their wish list. However, from here to take it to the next level, that is a possible transfer, there is a huge mountain in between named Napoli.
It now seems that Ottaiano was right to think Napoli would not be prepared to sell, with the club's president, Aurelio De Laurentiis, insisting Insigne is not going anywhere, per La Repubblica (via Sky Sports): "Arsenal offers 20 million for Insigne? This makes me laugh. I want to make Insigne rise to a value of 60-70 million."
Whether the Naples-born player would have been a good buy for Wenger is now likely irrelevant, but three Serie A goals in 36 appearances last term, per WhoScored, suggest he may not have necessarily been what Arsenal needed.
Atletico Threaten Vela Return
Atletico Madrid are reportedly targeting Carlos Vela as they attempt to replace the departed David Villa and the imminently departing Diego Costa, per Mundo Deportivo (h/t 101 Great Goals).
The former Gunner bagged 16 La Liga goals for Real Sociedad last season, per Squawka, and reports suggest Arsenal could buy him back for as little as €4 million (£3.2 million) due to a clause in his contract.
However, no such offers have been forthcoming, and Diego Simeone looks set to go in for the 25-year-old Mexican as he plans for a defence of Atletico's La Liga title next season.
Wenger needs to get his business done early in the summer transfer window, and goalscoring attacking players should be top of his list.
It seems Arsenal may miss out on some top targets, but Wenger must not let this happen. While the Gunners look to be targeting the right kind of player, they don't necessarily look like snapping up their top targets.
Depth is needed at the Emirates, as they faded from top to fourth in the Premier League last season. A successful transfer window is key to their chances of competing next season.