Raheem Sterling
Raheem Sterling's agent already confirmed the winger will not sign a new deal at LiverpoolGetty

Liverpool have turned down a £40m ($63.3m) bid from Manchester City for Raheem Sterling, according to the Guardian.

The Reds are holding out for a fee in the range of £50m ($79.16m), but a compromise is likely to be reached in the next few days, with the player refusing to extend his contract with the Merseyside club.

The 20-year-old has been among Liverpool's best players over the past couple of seasons and held his own in the 2014/15 campaign which saw the Reds fail miserably following the departure of Luis Suarez and a chronic injury to Daniel Sturridge.

Manchester United were also reported to be interested, with Louis van Gaal having a first bid rejected for the player.

However, the history of rivalry between the two clubs is unlikely to make for a smooth transfer between the two clubs and with City well ahead in their bidding, the Red Devils have not shown any signs of indulging in a contest.

Sterling would have the added benefit of being a homegrown player, which would allow the Citizens to comply with the FA stipulation for next season, which requires each team to have a requisite number of homegrown players in the squad.

The England international has shown he can play on the wings or through the middle and will compete with the likes of Jesus Navas for a spot. James Milner's departure has opened up a spot in the City line-up, and they are ready to spend in order to reclaim the title next season.

Meanwhile, Brendan Rodgers has already started his summer transfer business by signing Danny Ings and Milner and need to invest wisely this summer to replace Sterling, if they have to challenge the top four next season.

The former Swansea manager spent heavily on the signing of Mario Balotelli and Lazar Markovic last season, but they failed to live up to expectations. The Reds have now turned their attention to Hoffenheim midfielder Roberto Firmino and are set to enter a bidding war with the Manchester clubs for his signature.