Rafa Benitez has earmarked Raheem Sterling as the man to lead his acquisitions in the summer at Real Madrid, according to the Daily Mirror.
The news will come as a massive blow for Manchester City, Manchester United and Arsenal, who have been heavily linked with the player, who has refused to extend his contract with the Reds.
United wanted the player as an alternative to Gareth Bale, who is reportedly back in Madrid's plans for next season, with Benitez leading the charge to turn his fortunes around at the Santiago Bernabeu.
United were willing to pay up to £100m in the summer, but may have to change their plans given recent developments.
Brendan Rodgers is willing to keep Sterling for at least another year at Anfield, having been given a bleak picture of what can be without his blistering pace against Stoke. The Reds lost 6-1, their largest defeat in over four decades, which had almost put Rodgers' job under threat.
However, Benitez, who played an integral role in bringing Sterling to Liverpool in 2010, wants to reap the profits of his development in Madrid, where coupled with the liked of Bale and Cristiano Ronaldo, Sterling can wreck havoc on opposition defences.
Madrid failed to win a single trophy in the recently concluded season, crashing out of the semi-finals of Europe to Juventus and finishing second in the league behind Barcelona. Benitez will be tasked with the job of bringing Madrid back to their glory days, having won the Champions league and the La Liga once each in their last five years.
They can face competition from Bayern Munich, who are closely monitoring his progress, with Pep Guardiola set to revamp his squad after yet another Champions league failure, this time against Barcelona in the semi-finals.
Sterling is reported to be a keen admirer of the Spaniard, which could be the deciding factor in the deal, when bids come in for the 20-year-old. The Reds, in the meantime are preparing for life without two of their most influential players in the 2013/14 campaign, with Luis Suarez having already made his way to Barcelona last summer.