Real Madrid are reportedly looking to sell Dani Ceballos during this summer's transfer window but still want a fee of €40m (£34m) for the Spaniard.
The midfielder has spent each of the last two seasons on loan at Arsenal, making 77 appearances for the club, but the Gunners have decided against signing him on a permanent deal.
According to ABC, Real Madrid want to move the Spaniard on in the current market, but the La Liga giants have placed a €40m (£34m) valuation on his shoulders, which could price Milan out of a deal.
Ceballos joined Los Blancos from Real Betis in 2017 and was a regular during his first two seasons at the club, making 56 appearances in all competitions.
The midfielder's current deal with Ancelotti's team is due to expire in June 2023.