The Croatia international has started just one game this season and has played a total of 186 minutes across seven appearances in all competitions.
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He has fallen down the pecking order following the summer arrival of Frenkie de Jong from Ajax, with four of his five league appearances this season coming from the bench.
Reports earlier this week suggested the LaLiga giants were open to selling the 31-year-old in January, demanding at least €40million (£34m) for his services.
However, according to the Mail, the chance of a move is now effectively up in smoke due to the player’s family not keen on moving to Manchester.