Chelsea have reached an agreement to sell Conor Gallagher in a cut-price deal, according to a report.
Gallagher has been the subject of intense transfer speculation this summer.
Premier League duo Aston Villa and Tottenham were strongly linked with the midfielder.
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Despite Chelsea's stance on Gallagher, The Athletic claim the club tried to give the player a new contract ahead of his existing deal expiring next summer.
The Blues tabled a two-year contract, with the option for another 12 months.
Per the report, it included a pay rise that would have put him on wages comparable to the highest earners in the Chelsea midfield.
But Gallagher has rejected Chelsea's last-ditch contract offer as Atletico Madrid have stolen a march on Villa and Spurs.
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Atletico are in 'advanced discussions' over signing the England international for a fee of around €40 million (£34 million).
Chelsea had hoped to command £50 million for their academy graduate, meaning his departure would generate pure profit.
Enzo Maresca's side are currently in the United States for the club's pre-season tour, but Gallagher has yet to join the squad.
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And speaking ahead of their friendly against Club America, the Italian gaffer seemed to hint at the 24-year-old's transfer away from Chelsea.
"At the moment, Conor will be back with us when we are at Cobham,” he said. "I think he is already at Cobham or he will be in the next few days to start to do something with Cole (Palmer) and Marc (Cucurella).
"Then he will train with us. When the transfer window is open, unfortunately, anything can happen. Not only for Conor but for all of the players."
Gallagher made 50 appearances in all competitions last season and regularly captained his side in the absence of Reece James.
Topics: Conor Gallagher, Chelsea, Football, Atletico Madrid
Nasir Jabbar