Raheem Sterling
Liverpool must not give in to Sterling's demands, says Collymore.Getty Images

Liverpool have been advised not to cave in to Raheem Sterling's contract demands and instead sell the England international to Real Madrid should he demand to become the Anfield club's highest-paid player.

Brendan Rodgers confirmed on Monday that the 20-year-old is considering an "incredible" offer from the Reds worth £100,000-a-week, while reports suggest the Sterling camp are holding out for wages of £120,000 per week.

Sterling has played just 111 times for Liverpool since making his professional debut in 2012 and is barely three seasons into his role as a valued member of the first team squad, and Rodgers has warned the Merseyside club will not be pushed to their financial limit when renewing contracts.

The former Queens Park Rangers youngster has less than two-and-a-half years remaining on his current contract at Liverpool but Collymore says the club should consider cutting their losses if Sterling demands wages which would make him the club's highest annual earner.

"If Liverpool offer Sterling between £75,000 and £90,000 a week, he is doing exceptionally well on a five-year contract," Collymore told Talksport.

"If he's asking for £130,000 or £150,000 and wants to be the club's top earner, do you know what I would do? I would honestly sell him, as good as he had been for Liverpool.

"They have benefited from the emergence of players like Philippe Coutinho and Jordon Ibe, while Daniel Sturridge has come back and I think they will biff off Mario Balotelli and Rickie Lambert and get in another good striker.

"Sterling is a player who is obviously important to Liverpool, but I don't think he's a huge deal breaker down the line.

"By all accounts it seems that it is true Sterling is a target for Real Madrid, but he is living in an absolute dream world if he thinks he is getting in that team ahead of Ronaldo, Bale and Benzema.

"He could be sat on Real Madrid's bench for a couple of years, not get a game, get forgotten about, not necessarily get a game for England and end up coming back with his tail between his legs."