Liverpool Transfer News: Latest on Raheem Sterling and Mateo Kovacic Rumours

Arsenal boss Arsene Wenger is "watching every move" in the Raheem Sterling scenario, and "will enter the bidding," according to John Richardson of the Express.

Richardson also believes Real Madrid boss Rafa Benitez is "interested" in the wantaway Liverpool player but that Manchester City "remain the favourites" despite having a bid of an initial £25 million turned down. Interestingly, the Sun on Sunday (h/t Charles Perrin of the Express) suggests a sale needs to be made this summer if Liverpool are to receive anything like the £50 million they want for him.

Failure to do so could see Sterling's valuation drop to £20 million next summer, noted in Perrin's report. Sterling enters the final year of his contract in July 2016, per Transfermarkt, so it stands to reason that he would automatically be a cheaper purchase for any prospective buyers. This is without factoring in form; if he struggles during the 2015-16 season, he'll knock significant cash from his potential fee.

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As such, Liverpool manager Brendan Rodgers is likely in two minds. The Northern Irishman has repeatedly stated that Sterling isn't for sale, reported by James Pearce of the Liverpool Echo. However, cashing in would allow the boss to significantly improve his squad. Anywhere near £50 million could land Liverpool a star player who is far more established then Sterling or a couple of other top-quality purchases.

Keeping Sterling against his will and forcing him to perform could be disastrous for the club. It's the kind of situation that helps nobody involved—prolonging the inevitable is likely to frustrate Sterling, Rodgers and the club's fans. How are supporters going to react knowing he doesn't want to sign a new contract?

Holding onto Sterling would be a financial risk, but the more damaging aspects could arrive in the form of a toxic atmosphere. At this point, Rodgers would be wish to cash in, move on and let someone else deal with the player.

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He could spend some of the money on Inter Milan's Mateo Kovacic, a player who has allegedly agreed a £16.4 million deal to join the Anfield club, according to Tutto Mercato Web (h/t George Bellshaw of Metro).

The Croatian is a well-rounded midfielder who could play multiple positions for Rodgers. However, Tuttosport (h/t Marc Williams of the Daily Star) reports comments from the player that suggest he is still a long way from moving:

"For now I'm still happy in Italy, but we'll see about the future," said Kovacic. "There's no need for us to talk, I recently renewed my contract. I'm not expecting any further notifications, but of course you never know with the transfer market."

WhoScored.com recently looked at other options for Liverpool:

Kovacic is the type of signing who could make up for the loss of Sterling—exciting, young and eager to improve—but there's no doubt the Merseyside club has a huge decision to make in the coming weeks. That is unless any side bids £50 million for Sterling. In which case, he should be shipped off immediately.

B/R UK's Sam Tighe believes other changes should also be made:

Sterling put in a good performance during England's 3-2 win over Slovenia on Sunday, but he's far from justifying anything near his reported £50 million valuation. Even at £10 million less, he'd be extremely expensive.

Rodgers will know he faces a dilemma regardless—he'll either have a disgruntled player to handle or a Sterling-shaped gap to fill—so it doesn't help Liverpool to prolong the situation. Arsenal and Madrid's interest may help drive up the 20-year-old's price, and in turn, help the club transition away from this ongoing saga.