According to Bild (h/t Jake Polden at the Mirror) Liverpool have "been dealt a blow in their pursuit of the Germany international," although it is not all bad news for the Reds.
While Schalke are keen to see their star man commit his future to the club, with a new deal worth €8 million per year, they are willing to insert a clause that would allow Goretzka to leave.
However, the midfielder would only be allowed to depart, "should a top Champions League club come in for him."
Goretzka has emerged as one of the Bundesliga's most exciting midfielders at Schalke, and is out of contract next summer, making him a hugely attractive proposition.
The midfielder has also become a key figure at international level, as highlighted by Squawka:
As well as his goals and the attacking impetus he brings, Goretzka also possesses a strong defensive edge to his game, as noted by WhoScored.com:
Schalke will obviously be keen for him to extend his deal, to avoid losing him for free next year, but if he doesn't, Liverpool may face fierce competition for his signature.
Another midfielder who could be interested in a move to Liverpool is Rabiot, who has previously said he was a big fan of the Reds when he was a child, per L'Equipe (h/t Sport Witness).
Rabiot's contract renewal talks with the Ligue 1 club are also not progressing well, and he wants assurances that he will not have to keep playing a Thiago Motta role at the club.
The 22-year-old has been an ever-present for PSG this season, starting all nine league games and both Champions League matches, per WhoScored.com.
Rabiot has the ability to take control of matches, able to press opponents and protect his defence, while he is also excellent in possession, becoming a foundation on which PSG can build their attacks.
WhoScored.com highlighted exactly how good his distribution has been this season:
Still just 22, PSG will surely be desperate to hold onto Rabiot and see him commit his future to the club by signing a new long-term deal.
If not, there will surely be no shortage of admirers, but his open admission that he followed Liverpool may well give the Reds hope they could bring him to Anfield.